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World economic growth falls below last forecast: UN
15
Dec '15
The world economy has fallen below forecasts of even six months ago and will grow only modestly over the next two years due to “cyclical and structural headwinds,” including low commodity prices and stagnant investment, the United Nations has reported. It has urged steps to ensure stronger growth.

“Stronger and more coordinated policy efforts are needed to ensure robust, inclusive and sustainable economic growth, which will be a key determinant for achieving the 2030 Sustainable Development Goals,” UN Assistant Secretary-General of the UN Department of Economic and Social Affairs, Lenni Montiel said of the ambitious sustainability goals adopted at a UN summit in September.

Global growth is estimated at a mere 2.4 per cent in 2015, a downward 0.4 percentage-point revision from forecasts presented six months ago, according to the UN World Economic Situation and Prospects (WESP) 2016 report.

Amid lower commodity prices, large capital outflows and increased financial market volatility, growth in developing and transition economies has slowed to its weakest pace since the global financial crisis of 2008-2009, it noted.

Given the anticipated slowdown in China and persistently weak economic performances in other large emerging economies, notably the Russia and Brazil, the pivot of global growth is partially shifting again towards developed economies.

The global economy is projected to grow by 2.9 per cent in 2016 and 3.2 per cent in 2017, supported by generally less restrictive fiscal and still accommodative monetary policy stances worldwide, according to the report.

“The expected timing and pace of normalization of the US monetary policy will help reduce some policy uncertainties and provide impetus to revive investment,” Hamid Rashid, Chief of the UN's Global Economic Monitoring Unit said while presenting the report.

But preventing excessive volatility and ensuring an orderly adjustment in asset prices also depends on commodity price stabilization and no further escalation in geo-political conflicts, the report noted. Identifying five major headwinds, it cited persistent macroeconomic uncertainties; low commodity prices and diminished trade flows; rising volatility in exchange rates and capital flows; stagnant investment and productivity growth; and a continued disconnect between finance and real sector activities.

Weak growth is also adversely impacting labour markets in developing and transition economies, with unemployment on the rise, especially in South America, or stubbornly high, as in South Africa. At the same time, job insecurity is often becoming more entrenched amid a shift from salaried work to self-employment.

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