World output growth forecast to reduce to 1.9% in 2023: UN

However, 2024’s growth forecast is highly dependent on the pace and sequence of further monetary tightening, the course and consequences of the war in Ukraine, and the possibility of further supply-chain disruptions. For the near term, economic outlook is expected to be gloomy and uncertain, as per UN’s report.

A series of severe and mutually reinforcing shocks—the COVID-19 pandemic, the war in Ukraine and resulting food and energy crises, surging inflation, debt tightening, as well as the climate emergency—battered the world economy in 2022.

The tepid global economic prospects also threaten the achievement of the 17 Sustainable Development Goals (SDGs), when the 2023 SDG Summit in September marks the mid-point of the implementation of the 2030 Agenda.

Amid high inflation, aggressive monetary tightening, and heightened uncertainties, the current downturn has slowed the pace of economic recovery from the COVID-19 crisis, threatening several countries—both developed and developing—with the prospects of recession in 2023. Growth momentum significantly weakened in the US, the European Union (EU), and other developed economies in 2022, adversely impacting the rest of the global economy through a number of channels.

Tightening global financial conditions coupled with a strong dollar exacerbated fiscal and debt vulnerabilities in developing countries. Over 85 per cent of central banks worldwide tightened monetary policy and raised interest rates in quick succession since late 2021, to tame inflationary pressures and avoid a recession. Global inflation which reached a multi-decade high of about 9 per cent in 2022 is projected to ease but remain elevated at 6.5 per cent in 2023.

Most developing countries have seen a slower job recovery in 2022 and continue to face considerable employment slack.

According to the report, slower growth, coupled with elevated inflation and mounting debt vulnerabilities, threatens to further set back hard-won achievements in sustainable development, deepening the already negative effects of the current crises.

The report called for governments to avoid fiscal austerity which would stifle growth and disproportionately affect the most vulnerable groups and stymie development prospects across generations. It recommended reallocation and reprioritisation of public expenditures through direct policy interventions that will create jobs and reinvigorate growth.

Strategic public investments in digital infrastructure, new technologies and climate change mitigation and adaptation can offer large social returns, accelerate productivity growth, and strengthen resilience to economic, social, and environmental shocks, the report further suggested.

Additional SDG financing needs in developing countries vary by source, but are estimated to amount to a few trillion dollars per year. Stronger international commitment is urgently needed to expand access to emergency financial assistance; to restructure and reduce debt burdens across developing countries; and scale up SDG financing.

Fibre2Fashion News Desk (DP)