2023-05-16 19:27:30
The report, titled Global Economic Situation and Prospectsestimates that the world economy should now grow by 2.3% in 2023 (+0.4 percentage points compared to the January forecast) and by 2.5% in 2024 (-0.2 percentage points), a slight increase in global growth forecasts for 2023.
In the United States, the resilience of household spending led to an upward revision of growth forecasts to 1.1% in 2023. The economy of the European Union, driven by lower gasoline prices and robust consumer spending, is now expected to grow 0.9%.
China’s growth this year is now forecast at 5.3% due to the lifting of restrictions related to the COVID-19.
But despite this increase, the global growth rate is still well below the average growth rate of the two decades preceding the pandemic (3.1%), notes the report published by the United Nations Department of Economic and Social Affairs.
For many developing countries, growth prospects have deteriorated amid tighter credit conditions and higher external financing costs. In Africa, Latin America and the Caribbean, GDP per capita is expected to increase only slightly this year, reinforcing a longer-term trend of stagnant economic performance. The least developed countries are expected to grow by 4.1% in 2023 and 5.2% in 2024, well below the 7% growth target set in the 2030 Agenda for Sustainable Development.
A truck unloads corn at a processing plant in Ukraine.
Sustainable Development Goals
“The current global economic outlook presents an immediate challenge to achieving the SDGs (Sustainable Development Goals),” said UN Under-Secretary-General for Economic and Social Affairs Li Junhua. “The global community must urgently address the growing financing shortages facing many developing countries, building their capacity to make critical investments in sustainable development and helping them transform their economies to achieve inclusive and sustainable goals”.
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 expected to increase by 2.3% in 2023, well below the pre-pandemic trend.
High inflation
Inflation remains stubbornly high in many countries, even though international food and energy prices have fallen significantly over the past year. Global average inflation is expected to stand at 5.2% in 2023, down from 7.5% in 2022. While upward pressures on prices are expected to slowly ease, inflation in many countries will remain well above central bank targets. Amid local supply disruptions, high import costs and market imperfections, domestic food inflation is still high in most developing countries, disproportionately affecting the poor, especially women and the children.
Labor markets in the United States, Europe and other developed economies continued to show remarkable resilience, contributing to continued strength in household spending. Against a backdrop of widespread labor shortages and low unemployment rates, wage gains accelerated. Employment rates are at record highs in many developed economies, with gender gaps narrowing since the pandemic.
Monetary tightening
However, exceptionally strong labor markets make it difficult for central banks to control inflation. The Federal Reserve, European Central Bank and central banks of other developed countries continued to raise interest rates in 2023, but at a slower pace than last year, which saw the most monetary tightening. aggressive for decades. The banking sector turmoil in the United States and Europe has added new uncertainties and new challenges for monetary policy.
While swift and decisive action by regulators has helped contain financial stability risks, vulnerabilities in the global financial architecture and the steps taken to contain them are likely to dampen credit and investment growth going forward. .
The rapid tightening of global financial conditions poses major risks for many developing countries and economies in transition.
Rising interest rates, combined with the shift in developed economies from quantitative easing to quantitative tightening, have exacerbated debt vulnerabilities and further restricted fiscal space.
According to the UN, current political challenges require stronger cross-border political cooperation and concerted global actions to prevent many developing economies from becoming trapped in a vicious cycle of low growth and high debt.
1684268940
#World #economy #risk #prolonged #period #weak #growth #warns