Global economic growth is expected to fall significantly to 1.9 percent this year as a result of the food and energy crisis sparked by the war in Ukraine, the impact of the COVID-19 pandemic, persistently high inflation and the climate emergency, the UN said in a report released on Wednesday.
Painting a gloomy and uncertain economic outlook, the UN Department of Economic and Social Affairs said the global economic 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,” UN Secretary-General Antonio Guterres said in a foreword to the 178-page report.
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The report said this year’s 1.9 percent economic growth forecast — down from an estimated 3 percent last year — is one of the lowest growth rates in recent decades.
However, it projects a moderate rise to 2.7 percent next year if inflation gradually abates and economic headwinds subside.
In its annual report earlier this month, the World Bank, which lends money to poorer countries for development projects, cut its growth forecast nearly in half, from a previous projection of 3 percent to just 1.7 percent.
UN Department of Economic and Social Affairs policy division director Shantanu Mukherjee highlighted growing income inequality in the world at a news conference launching the report.
From 2019 to 2021, average incomes for the top 10 percent rose by 1.2 percent while the incomes of the lowest 40 percent fell by 0.5 percent, Mukherjee said.
“The top 10 percent now earns on average over 42 times what the lowest percentiles” earn, he added.
This year, “growth momentum has weakened in the United States, the European Union and other developed economies, adversely affecting the rest of the world economy,” the UN report said.
GDP in the US is projected to expand by only 0.4 percent this year after estimated growth of 1.8 percent last year, the report said.
Many European countries are projected to experience “a mild recession” with the war in Ukraine heading into its second year, as high energy costs, inflation and tighter financial conditions depress household consumption and investment, it said.
Economies in the 27-nation EU are forecast to grow by just 0.2 percent this year, down from an estimated 3.3 percent last year, the UN said.
In the UK, which left the EU three years ago, GDP is projected to contract by 0.8 percent this year, continuing a recession that began in the second half of of last year, it said.
With China abandoning its “zero COVID” policy late last year, and its easing of monetary and fiscal policies, the UN said that its economy, which expanded by only 3 percent last year, could accelerate to 4.8 percent this year.
“But the reopening of the economy is expected to be bumpy,” the report said. “Growth will likely remain well below the pre-pandemic rate of 6 to 6.5 percent.”
Japan’s economy is expected to be among the better-performing among developed countries this year, with GDP forecast to increase by 1.5 percent, slightly lower than last year’s estimated growth of 1.6 percent, it said.
Growth in India, which is expected to overtake China this year as the world’s most populous nation, is forecast to remain strong at 5.8 percent, slightly lower than an estimated 6.4 percent last year, “as higher interest rates and a global slowdown weigh on investments and exports,” the report said.
For the world’s least developed countries, the UN said growth is projected at 4.4 percent this year, about the same as last year, but significantly below the UN’s target of 7 percent by 2030.
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