Prospects for robust global economic recovery remain dim: UN report

Instead, the world economy faces the risk of a prolonged period of low growth as the lingering effects of the COVID-19 pandemic, the ever-worsening impact of climate change and macroeconomic structural challenges remain unaddressed, the report said.

The world economy is now projected to grow by 2.3 per cent in 2023 (plus 0.4 percentage points from the January forecast) and 2.5 per cent in 2024 (minus 0.2 percentage points), a slight uptick in the global growth forecast for 2023.

In the United States, resilient household spending has prompted upward revision of growth forecast to 1.1 per cent in 2023.

The European Union’s economy—driven by lower gas prices and robust consumer spending—is now projected to grow by 0.9 per cent, the report said.

China’s growth this year is now forecast at 5.3 per cent as a result of COVID-19-related restrictions being lifted. But a sombre picture still remains, the report noted. Despite this uptick, the growth rate is still well below the average growth rate in the two decades before the pandemic of 3.1 per cent.

For many developing countries, growth prospects have deteriorated amid tightening credit conditions and rising costs of external financing.

In Africa and Latin America and the Caribbean, GDP per capita is projected to increase only marginally this year, reinforcing a longer-term trend of stagnating economic performance, the UN report said.

The least developed countries are forecast to grow by 4.1 per cent in 2023 and 5.2 per cent in 2024, far below the 7 per cent growth target set in the 2030 Agenda for Sustainable Development.

Global trade remains under pressure due to geopolitical tensions, weakening global demand and tighter monetary and fiscal policies. The volume of global trade in goods and services is forecast to grow by 2.3 per cent in 2023, well below the pre-pandemic trend.

Inflation has remained stubbornly high in many countries even as international food and energy prices fell substantially in the past year. Average global inflation is projected at 5.2 per cent in 2023, down from a two-decade high of 7.5 per cent in 2022.

While upward price pressures are expected to slowly ease, inflation in many countries will remain well above central banks’ targets.

Labour markets in the United States, Europe and other developed economies have continued to show remarkable resilience, contributing to sustained robust household spending, noted the report. Amid widespread worker shortages and low unemployment rates, wage gains have picked up.

Employment rates are at record high levels in many developed economies with gender gaps narrowing since the pandemic, the report added.

Fibre2Fashion News Desk (DS)