The World Bank urged countries to embark on green economic recoveries in the aftermath of the COVID-19 pandemic in its latest Global Economic Prospects report.
The report describes the challenges facing countries worldwide following the worst economic recession in decades. Public debt levels, particularly for low-income countries, have reached unsustainable levels, alongside surging private debt levels for both individuals and the private sector. Investment, meanwhile, has dried up amid the economic shutdowns imposed to contain COVID-19.
Looming over all of this, however, is the escalating climate emergency. David Malpass, president of the World Bank Group, wrote in the report’s foreword that countries have a unique opportunity to overcome economic challenges by focusing on a green economic recovery.
“As countries formulate policies for recovery, they have a chance to embark on a greener, smarter, and more equitable development path,” Malpass wrote. “Investing in green infrastructure projects, phasing out fossil fuel subsidies, and offering incentives for environmentally sustainable technologies can buttress long-term growth, lower carbon output, create jobs, and help adapt to the effects of climate change.”
The report notes that the global economy contracted by 4.3% last year, a sharp decline that was most heavily felt in emerging markets and developing countries (EMDE), falling primarily on people living in poverty. East Asia and the Pacific, Latin America and the Caribbean, and South Asia faced the steepest economic contractions over the past year.
“The pandemic has caused per capita incomes to fall in more than 90% of EMDEs, tipping millions back into poverty,” according to the report.
The UN recently reported that 32 million people could be pulled into extreme poverty because of the disruptions caused by the pandemic. Another UN report said that current efforts to alleviate poverty during the pandemic have been “full of holes.”
A major obstacle preventing economies from rebounding is rising debt levels and insufficient means for servicing them. Global Citizen recently joined the International Chamber of Congress and the International Trade Union Confederation in calling on G20 countries to substantially reduce and even forgive sovereign debt held by low-income countries.
The World Bank echoed this recommendation in its latest report, calling for relieving debt burdens through restructurings.
The report outlines several factors that could impede economic recovery in the months ahead.
“Downside risks include the possibility of a further resurgence of the virus, vaccination delays, more severe effects on potential output from the pandemic, and financial stress,” the report says. “The heightened level of uncertainty highlights the role of policymakers in raising the likelihood of better outcomes while warding off worse ones.”
Policymakers can make a solid recovery more likely by ensuring universal access to COVID-19 vaccinations and treatments. They can also prioritize green economic investments that put people to work, rehabilitate the natural world, and transform economies to focus on human and environmental health.
“Making the right investments now is vital both to support the recovery when it is urgently needed and foster resilience,” the report says. “Our response to the pandemic crisis today will shape our common future for years to come. We should seize the opportunity to lay the foundations for a durable, equitable, and sustainable global economy."