UN forecasts fall in global economic growth to 1.9 per cent in 2023

UNITED NATIONS –

The United Nations forecast Wednesday that international financial development will fall considerably to 1.9 per cent this 12 months on account of the meals and vitality disaster sparked by the battle in Ukraine, the continued influence of the COVID-19 pandemic, persistently excessive inflation and the local weather emergency.

Painting a dismal and unsure financial outlook, the U.N. Department of Economic and Social Affairs mentioned the present international financial slowdown “cuts across both developed and developing countries, with many facing risks of recession in 2023.”

“A broad-based and severe slowdown of the global economy looms large amid high inflation, aggressive monetary tightening, and heightened uncertainties,” U.N. Secretary-General Antonio Guterres mentioned in a foreword to the 178-page report.

The report mentioned this 12 months’s 1.9 per cent financial development forecast — down from an estimated 3 per cent in 2022 — is without doubt one of the lowest development charges in current many years. But it initiatives a average pick-up to 2.7 per cent in 2024 if inflation steadily abates and financial headwinds begin to subside.

In its annual report earlier this month, the World Bank which lends cash to poorer international locations for growth initiatives, reduce its development forecast practically in half, from it earlier projection of three per cent to simply 1.7 per cent.

The International Monetary Fund, which offers loans to needy international locations, projected in October that international development would sluggish from 6 per cent in 2021 to three.2 per cent in 2022 and a pair of.7 per cent in 2023. IMF Managing Director Kristalina Georgieva mentioned ultimately week’s World Economic Forum in Davos that 2023 shall be a tough 12 months, however caught by the projection and mentioned “we don’t expect a global recession.”

Shantanu Mukherjee, director of the financial evaluation and coverage division of the U.N. Department of Economic and Social Affairs, highlighted the rising revenue inequality on this planet at a news convention launching the report.

Between 2019 and 2021, he mentioned, common incomes for the highest 10 per cent rose by 1.2 per cent whereas the incomes of the bottom 40 per cent fell by 0.5 per cent.

“The top 10 per cent now earns on average over 42 times what the lowest percentiles” earn, Mukherjee mentioned.

According to the U.N. report, this 12 months “growth momentum has weakened in the United States, the European Union and other developed economies, adversely affecting the rest of the world economy.”

In the United States, GDP is projected to increase by solely 0.4 per cent in 2023 after estimated development of 1.8 per cent in 2022, the U.N. mentioned. And many European international locations are projected to expertise “a mild recession” with the battle in Ukraine heading into its second 12 months on Feb. 14, excessive vitality prices, and inflation and tighter monetary situations miserable family consumption and funding.

The economies within the 27-nation European Union are forecast to develop by simply 0.2 per cent in 2023, down from an estimated 3.3 per cent in 2022, the U.N. mentioned. And within the United Kingdom, which left the EU three years in the past, GDP is projected to contract by 0.8 per cent in 2023, persevering with a recession that started within the second half of 2022, it mentioned.

With China’s authorities abandoning its zero-COVID coverage late final 12 months and easing financial and monetary insurance policies, the U.N. forecast that its financial system, which expanded by solely 3 per cent in 2022, will speed up to 4.8 per cent this 12 months.

“But the reopening of the economy is expected to be bumpy,” the U.N. mentioned. “Growth will likely remain well below the pre-pandemic rate of 6-6.5 per cent.”

The U.N. report mentioned Japan’s financial system is predicted to be among the many better-performing amongst developed international locations this 12 months, with GDP forecast to extend by 1.5 per cent, barely decrease than final 12 months’s estimated development of 1.6 per cent.

Across east Asia, the U.N. mentioned financial restoration stays fragile although GDP development in 2023 is forecast to achieve 4.4 per cent, up from 3.2 per cent final 12 months, and stronger than in different areas.

In South Asia, the U.N. forecast common GDP development will sluggish from 5.6 per cent final 12 months to 4.8 per cent this 12 months on account of excessive meals and vitality costs, “monetary tightening and fiscal vulnerabilities.”

But development in India, which is predicted to overhaul China this 12 months because the world’s most populous nation, is predicted to stay robust at 5.8 per cent, barely decrease than the estimated 6.4 per cent in 2022, “as higher interest rates and a global slowdown weigh on investments and exports,” the U.N. report mentioned.

In Western Asia, oil-producing international locations are benefiting from excessive costs and rising output in addition to a revival in tourism, the U.N. mentioned. But economies that are not oil producers stay weak “given tightening access to international finance and severe fiscal constraints,” and common development within the area is projected to sluggish from an estimated 6.4 per cent in 2022 to three.5 per cent this 12 months.

The U.N. mentioned Africa has been hit “by multiple shocks, including weaker demand from key trading partners (especially China and Europe), a sharp increase in energy and food prices, rapidly rising borrowing costs and adverse weather events.”

One end result, it mentioned, is mounting debt-servicing burdens which have pressured a rising variety of African governments to hunt bilateral and multilateral assist.

The U.N. projected financial development in Africa to sluggish from an estimated 4.1 per cent in 2022 to three.8 per cent this 12 months.

In Latin America and the Caribbean, the U.N. mentioned the outlook “remains challenging,” citing labor market prospects, stubbornly excessive inflation and different points. It forecast that regional development will sluggish to simply 1.4 per cent in 2023 from an estimated enlargement of three.8 per cent in 2022.

“The region’s largest economies — Argentina, Brazil and Mexico — are expected to grow at very low rates due to tightening financial conditions, weakening exports, and domestic vulnerabilities,” the U.N. mentioned.

For the world’s least developed international locations, the U.N. mentioned development is projected at 4.4 per cent this 12 months, about the identical as final 12 months however considerably under the UN’s goal of seven per cent by 2030.