The United Nations predicted on Wednesday that global economic growth will fall to 1.9% this year due to the food and energy crisis caused by the war in Ukraine, the impact of the COVID-19 pandemic, persistently high inflation and the climate emergency.
Painting a bleak and uncertain economic outlook, the UN Department of Economic and Social Affairs said the current global economic slowdown “is cutting across developed and developing economies country, many of which face risks of recession by 2023.”
“A broad and severe slowdown in the global economy looms large amid high inflation, aggressive monetary tightening, and heightened uncertainty,” UN Secretary-General Antonio Guterres said in the introduction to the 178- page report.
The report said that the 1.9% economic growth forecast this year – from an estimated 3% in 2022 – is one of the lowest growth rates in recent decades. But it projects a modest increase of 2.7% in 2024 when inflation gradually declines and economic headwinds begin to subside.
In its annual report earlier this month, the World Bank, which lends money to poor countries for development projects, cut its growth estimate by nearly half, from a previous projection of 3% to 1.7 % only.
The International Monetary Fund, which provides loans to countries in need, projected in October that global growth will slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. IMF Managing Director Kristalina Georgieva said at last week’s World Economic Forum in Davos that 2023 will be a difficult year, but held back on the projection and said “we don’t expect a global recession.”
Shantanu Mukherjee, director of the economic analysis and policy division of the UN Department of Economic and Social Affairs, highlighted the growing income inequality in the world in a news conference that launched the report.
Between 2019 and 2021, he said, the average income for the top 10% increased by 1.2% while the income of the lowest 40% fell by 0.5%.
“The top 10% now earn on average more than 42 times what the lowest percent earns,” Mukherjee said.
According to the UN report, this year “growth has weakened in the United States, the European Union and other developed economies, affecting other parts of the world economy.”
In the United States, GDP is expected to expand by only 0.4% in 2023 after an estimated growth of 1.8% in 2022, the UN said. And many European countries are expected to experience “a mild recession” with the war in Ukraine heading into its second year on February 14, high energy costs, and inflation and tighter fiscal conditions. which discourages household consumption and investment.
The economies of the 27-nation European Union are forecast to grow by just 0.2% in 2023, from an estimated 3.3% in 2022, the UN said. And in the United Kingdom, which left the EU three years ago, GDP is expected to contract by 0.8% in 2023, continuing a recession that began in the second half of 2022, it said.
With the Chinese government abandoning its zero-COVID policy late last year and easing monetary and fiscal policies, the UN predicts that its economy, which grew by just 3% in 2022, will accelerate to by 4.8% this year.
“But the reopening of the economy is expected to be bumpy,” the UN said. “Growth is likely to remain well below the pre-pandemic rate of 6-6.5%.”
The UN report said that Japan’s economy is expected to be one of the better performing developed countries this year, with GDP estimated to increase by 1.5%, slightly lower than last year’s estimated growth. year of 1.6%.
Across east Asia, the UN said economic recovery remains weak although GDP growth in 2023 is forecast to reach 4.4%, up from 3.2% last year, and stronger than other regions.
In South Asia, the UN predicts that average GDP growth will slow from 5.6% last year to 4.8% this year as a result of high food and energy prices, “monetary tightening and fiscal weaknesses.”
But growing up Indiawhich is expected to overtake China this year as the world’s most populous country, is expected to remain stable at 5.8%, slightly lower than the estimated 6.4% in 2022, “while higher interest rates and the global that slowdown is weighing on investments and exports,” the UN report said.
In West Asia, oil-producing countries have benefited from high prices and increased output as well as a revival in tourism, the UN said. But non-oil producing economies remain vulnerable “given tightening access to international finance and severe fiscal constraints,” and average growth in the region is expected to slow from an estimated 6.4% in 2022 to 3.5% this year.
The UN said Africa hit “by several shocks, including weaker demand from key trading partners (especially China and Europe), a sharp rise in energy and food prices, rapidly rising borrowing costs and bad weather events.”
One result, it is said, is the increase in debt service burdens which forces more and more African governments to seek bilateral and multilateral support.
The UN projects Africa’s economic growth to slow from an estimated 4.1% in 2022 to 3.8% this year.
In Latin America and the Caribbean, the UN said the outlook “remains challenging,” citing labor market prospects, stubbornly high inflation and other issues. It predicts that growth in the region will slow to 1.4% in 2023 from an estimated expansion of 3.8% in 2022.
“The largest economies in the region – Argentina, Brazil and Mexico – are expected to grow at very low rates due to tightening financial conditions, weakening exports, and domestic vulnerabilities,” the UN said.
For the world’s smallest countries, the UN says growth is projected at 4.4% this year, almost the same as last year but well below the UN’s target of 7% by 2030.