The World Bank went on to revise upward its projection for Turkey’s gross domestic product (GDP) growth in 2020, according to its new Global Economic Outlook report.

The international financial institution estimates that the Turkish economy has grown 0.5% in 2020, up from an estimated 3.8% contraction in June, "amid a substantial expansion in credit," the report said Tuesday.

It projects the global economy would see subdued recovery in 2021 but also sees plenty of risks, following the sharp contraction in 2020, which would be the biggest plunge in global output since 1945.

Turkey is forecast to see its GDP grow 4.5% in 2021, down from previous expectations of a 5% increase.

"The outlook has been downgraded as the sharp acceleration in new COVID-19 cases, weaker-than-expected international tourism, and tighter than-anticipated monetary policy weigh on the recovery," the report said.

The economy is estimated to see a 5% growth in 2022.

"Despite hikes in the policy interest rate, the lira hit new lows against the U.S. dollar, which eroded balance sheets and limited the space available for additional countercyclical policy responses," it said.

Driven by fiscal stimulus and the lifting of virus-related lockdowns, Turkey’s economy roared to a more-than-expected 6.7% growth rate in the third quarter, after contracting by 9.9% in the previous three months when lockdowns were imposed to curb the initial coronavirus wave.

The burst of growth included a more than 15% jump from the previous quarter.

Ankara projects the 2020 growth to come in at 0.3% but has said a contraction of 1.5% is possible under a worst-case scenario. It projects a rebound of 5.8% in 2021.

Biggest plunge since 1945

World Bank predicted that the global economy would experience a subdued recovery this year from the devastating pandemic but it warned that the near-term outlook is highly uncertain and growth could be imperiled if coronavirus infections and delays in the rollout of vaccines continue.

It forecast 4% growth this year following a 4.3% decline in 2020, the biggest plunge in global output since a contraction of 9.8% in 1945 as nations demobilized at the end of World War II.

By comparison, the global recession triggered by the Great Depression of the 1930s saw growth shrink by 4.8% on average from 1930 through 1932. The 2008 financial crisis triggered a 1.8% drop in global output in 2009.

"If history is any guide, the global economy is heading for a decade of growth disappointments unless policymakers put in place comprehensive reforms," the bank warned, citing the global pandemic layered over economic trends already in play.

"While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges in public health, debt management, budget policies, central banking and structural reforms," World Bank President David Malpass was cited as saying by the Associated Press (AP).

The bank said global growth will be aided by a recovery this year to GDP growth of 3.5% in the U.S. and an even bigger 7.9% rebound in China, the world’s two biggest economies. For 2020, the World Bank expects GDP in the United States to fall by 4.3% while it predicted a modest 2% increase in China.

Because of the uncertainty caused by the current resurgence in virus cases and initial problems in distributing vaccines, the World Bank cautioned that its forecast is highly uncertain.

Under a scenario where virus cases continue to rise and the rollout of the vaccine does not accelerate, global growth could be reduced to a meager 1.6% this year.

The new report boosted global growth for 2020 by 0.9 percentage points from its June forecast, reflecting in part a better-than-expected performance in China and the U.S. But the forecast trimmed the outlook for 2021 by 0.2 percentage points.

For the United States, the decline for 2020 was revised up by 2.5 percentage points to a smaller decline of 3.6%, and the 3.5% rebound for 2021 was lowered by half a percentage point.

To combat the sharp downturn, the World Bank has made $160 billion available to help more than 100 countries protect the poor, support businesses and bolster the recovery.

Malpass, in a briefing for reporters, said the World Bank was making available $12 billion to provide 1 billion COVID-19 vaccinations to poor countries.

"People at the bottom of the income scale were hardest hit by the shutdowns and recession and will most likely be the slowest to regain jobs and get vaccinations," Malpass said.

The World Bank expects the euro area will suffer a 7.4% drop in growth for 2020 followed by a 3.6% rise in 2021, while it says Japan's growth will fall 5.3% in 2020 and then rebound by 2.5% this year.

For all advanced economies, the World Bank predicted a drop of 5.4% in 2020 and a rise of 3.3% in 2021. For emerging markets and developing countries, the World Bank said when all figures are reported, growth will have dropped 2.6% in 2020 and that will be followed by an increase of 5% this year.