Tashkent, Uzbekistan (UzDaily.com) -- The World Bank published the report "COVID-19 and Human Capital (Economic Outlook Update for Europe and Central Asia)".

The following main points are noted in the report.

First, as a result of the COVID-19 coronavirus pandemic, the global economy has plunged into its deepest recession in 80 years. In the emerging market and developing economies of the Europe and Central Asia (ECA) region, GDP is expected to contract by 4.4% in 2020.

In particular, according to the WB forecasts, the Russian economy will contract by 5% in 2020 and grow by 2.8% in 2021 and 2.4% in 2022.At the same time, among the risks and challenges that may restrain economic growth , lists: 1) geopolitical risks and the threat of new sanctions, an increase in the incidence of COVID-19; 2) the beginning of widespread vaccination of the population only in 2022; 3) deterioration in asset quality, profitability and capital adequacy in the banking sector; 4) further decline in energy prices; 5) growth of poverty; 6) a possible increase in the share of the public sector in the economy after the pandemic.

Second, economic growth in the region is projected to resume in 2021, but the pace of economic recovery remains highly uncertain and depends on the duration of the pandemic, vaccine availability and availability, and the degree to which trade and investment have improved.

If the pandemic develops further, which will require the imposition of restrictions for a long period and will lead to increased geopolitical tensions, the recovery process may be slower than expected.

Third, structural problems, including limited participation in international competition and a low level of innovation in the economy, continue to negatively impact the business environment. Increasing investment in human capital and building resilience to climate change will be critical to improving living standards and fostering inclusive and sustainable growth.

Fourth, the COVID-19 coronavirus pandemic has dealt a direct blow to the human capital of Europe and Central Asia, having a negative impact on education and human health. School closures can lead to a loss in education of one third of a full year of schooling and further exacerbate inequalities, disproportionately affecting disadvantaged students.

In particular, according to WB experts, due to the closure of schools in quarantine due to the COVID-19 pandemic in Russia, students will lose a little more than a third of the regular school year, which will lead to a deterioration in their results in the PISA test (an international program for assessing educational achievements of students) and potentially lower earnings as schoolchildren become adults.

Based on the average forecast of the World Bank, the loss of full-time school hours in Russia can reduce the future income of schoolchildren by 2.5% per year throughout the life of an employee. In this context, experts estimate that each year of schooling adds 8-9% to the employee’s expected future income. Accordingly, if this relationship is considered linear, a complete loss of one third of the school year would reduce future earnings by about 3%. Also, a country’s decline in the PISA test can be converted into potential GDP losses along with future workers’ income.

Overall, once the health and economic crisis caused by the pandemic is under control, countries in the ECA region will need to take action to tackle the sharp drop in productivity growth that has occurred over the past decade and focus on structural reforms. necessary to improve long-term economic growth prospects, accelerate growth and attract investment.

At the same time, the most important challenges for the ECA region remain to modernize the foundations of education systems, expand access to higher education and improve its quality, and reduce risk factors for public health.