UN report: The risk of continued low growth looms large globally
NEW YORK, May 17 (IANS) Prospects for a strong global economic recovery remain bleak amid stubborn inflation, rising interest rates, and mounting uncertainties.
Instead, the global economy faces the risk of a prolonged period of low growth as the lingering effects of the Covid-19 pandemic, the ever-worsening impact of climate change and macro-economic structural challenges remain unaddressed, and the global economic situation and prospects are in the mid-1900s. – 2023 released on Tuesday.
According to the report, the global economy is now expected to grow by 2.3 percent in 2023 (plus 0.4 percentage points from the January forecast) and 2.5 percent in 2024 (minus 0.2 percentage points), which is a slight uptick in the global growth forecast. for the year 2023.
In the United States, resilient household spending has led to an upward revision of the growth forecast to 1.1 percent in 2023. The European Union economy, driven by lower gas prices and strong consumer spending, is now expected to grow by 0.9 percent. Growth in China this year is now expected to be 5.3 percent as a result of the lifting of restrictions related to Covid-19.
But the gloomy picture remains.
Despite this uptick, the growth rate is still well below the average growth rate of the two decades preceding the pandemic of 3.1 percent. For many developing countries, growth prospects have deteriorated amid tightening credit conditions and rising external financing costs.
In Africa and Latin America and the Caribbean, GDP per capita is expected to increase only marginally this year, reinforcing the long-term trend of stagnation in economic performance.
The least developed countries are expected to grow by 4.1 percent in 2023 and 5.2 percent in 2024, which is well below the 7 percent growth target set in the 2030 Agenda for Sustainable Development.
“The current global economic outlook presents an immediate challenge to achieving the SDGs,” said UN Under-Secretary-General for Economic and Social Affairs Li Junhua.
“The global community must urgently address the growing financing shortfalls that many developing countries face, strengthening their capacities to make critical investments in sustainable development and helping them transform their economies for inclusive and sustainable long-term growth.”
Global trade remains under pressure due to geopolitical tensions, weak global demand and tightening monetary and fiscal policies.
Global trade volume in goods and services is expected to grow by 2.3 percent in 2023, which is well below the pre-pandemic trend.
Inflation remained high in many countries even as international food and energy prices fell sharply last year. Global inflation is expected to average 5.2 percent in 2023, down from a two-decade high of 7.5 percent in 2022.
While upward price pressures are expected to slowly abate, inflation in many countries will remain well above central bank targets. Amid domestic supply disruptions, high import costs and market imperfections, domestic food inflation remains high in most developing countries, disproportionately affecting the poor, especially women and children.
Labor markets in the United States, Europe and other developed economies continued to show remarkable resilience, which contributed to continued strong household spending.
Amidst a massive worker shortage and low unemployment, wage gains have rebounded.
Employment rates are at record high levels in many advanced economies as gender gaps narrow since the pandemic.
However, exceptionally strong labor markets make it difficult for central banks to tame inflation. The Federal Reserve, the European Central Bank and central banks of other developed countries continued to raise interest rates in 2023, but at a slower pace than last year, which saw the most severe monetary tightening in decades.
Banking sector turmoil in the US and Europe added new uncertainties and challenges to monetary policy. Although swift and decisive action by regulators helped contain financial stability risks, weaknesses in the global financial architecture and measures taken to contain them are likely to dampen future credit and investment growth.
The rapid tightening of global financial conditions poses significant risks to many developing countries and economies in transition.
Rising interest rates, along with the shift in advanced economies from quantitative easing to quantitative tightening, exacerbated debt vulnerability and further constrained fiscal space.
Current policy challenges require stronger cross-border policy cooperation and concerted global action to prevent many developing economies from becoming trapped in a vicious cycle of low growth and high debt.