(Photo: Xinhua)

UNITED NATIONS, May 13 (Xinhua) -- Against the backdrop of a devastating pandemic, the global economy is projected to contract sharply by 3.2 percent this year, according to the United Nations World Economic Situation and Prospects (WESP) mid-2020 report published on Wednesday.

The global economy is expected to lose nearly 8.5 trillion U.S. dollars in output over the next two years due to the COVID-19 pandemic, wiping out nearly all gains of the previous four years. The sharp economic contraction, which marks the sharpest contraction since the Great Depression in the 1930s, comes on top of anemic economic forecasts of only 2.1 percent at the start of the year.

The report estimates that GDP growth in developed economies is expected to plunge to minus 5 percent in 2020. A modest, 3.4 percent growth - barely enough to make up for the lost output - is expected in 2021. World trade is forecast to contract by nearly 15 percent in 2020 amid sharply reduced global demand and disruptions in global supply chains.

Nearly 90 percent of the world economy has been under some form of lockdown, disrupting supply chains, depressing consumer demand and putting millions out of work. Under the baseline scenario, the developed economies are expected to contract by 5 percent in 2020, while the output of developing countries will shrink by 0.7 percent.

The pandemic will likely cause an estimated 34.3 million people to fall below the extreme poverty line in 2020, with 56 percent of this increase occurring in African countries. An additional 130 million people may join to the ranks of people living in extreme poverty by 2030, dealing a huge blow to global efforts for eradicating extreme poverty and hunger. The pandemic, which is disproportionately hurting low-skilled, low-wage jobs, while leaving higher-skilled jobs less affected - will further widen income inequality within and between countries.

Facing an unprecedented health, social and economic crisis, governments across the world have rolled out large fiscal stimulus measures - equivalent to an estimated 10 percent of GDP - to combat the pandemic and minimize its livelihood impacts. However, the depth and severity of the crisis foreshadows a slow and painful recovery.

"The pace and strength of the recovery from the crisis not only hinges on the efficacy of public health measures in slowing the spread of the virus, but also on the ability of countries to protect jobs and incomes, particularly of the most vulnerable members of our societies," said UN Chief Economist and Assistant Secretary-General for Economic Development Elliott Harris.