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Three Warnings for Emerging Economies

Summary:
The most recent World Bank outlook for emerging markets and developing economies is especially significant because of the cautionary messages it contains. Whereas rich countries appear set to return to or even exceed their pre-pandemic growth rates, the developing world's prospects are more mixed. ITHACA – The World Bank’s Global Economic Prospects (GEP) report, published twice a year, is the most important source for evaluating the current and future outlook for emerging markets and developing economies (EMDEs). The recently released June edition is especially significant because of the warnings it contains. The End of the Islamic Republic Majid Saeedi/Getty Images

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The most recent World Bank outlook for emerging markets and developing economies is especially significant because of the cautionary messages it contains. Whereas rich countries appear set to return to or even exceed their pre-pandemic growth rates, the developing world's prospects are more mixed.

ITHACA – The World Bank’s Global Economic Prospects (GEP) report, published twice a year, is the most important source for evaluating the current and future outlook for emerging markets and developing economies (EMDEs). The recently released June edition is especially significant because of the warnings it contains.

Someone reading this report too quickly could easily miss the bad news, because, as with all publications by international organizations, it comes sugarcoated. That is the responsible thing for the World Bank to do: avoid causing alarm. But policymakers should heed the important cautionary messages buried in the text.

This GEP makes three key points. First, the world economy is recovering from the pandemic, but while advanced economies, with already successful or rapidly progressing COVID-19 vaccination programs, appear set to return to or even exceed their earlier growth rates, EMDEs’ prospects are more mixed.

The strongest-looking emerging-market region is East Asia and the Pacific, where the World Bank forecasts 7.7% GDP growth in 2021, ahead of South Asia’s 6.8% expansion. Within this broad region, output in China, Vietnam, and Bangladesh has now surpassed pre-pandemic levels, and the latter...

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