The COVID-19 pandemic, the war in Ukraine and the resulting food and energy crises, spiraling inflation, mounting debt and the climate emergency, are all mutually reinforcing factors. and which have shaken the global economy in 2022, leading to a slowdown in global output growth, which is expected to decline from an estimated rate of 3% in 2022 to 1.9% in 2023.
This is according to the forecasts of the United Nations’ latest report on the situation and prospects of the world economy in 2023, published on Wednesday, which points to a gloomy and uncertain economic outlook in the short term.
« Now is not the time for short-term thinking or ill-considered fiscal austerity that exacerbates inequality, increases suffering and threatens to jeopardize the achievement of the Sustainable Development Goals. We live in unprecedented times, which require unprecedented action said António Guterres, Secretary General of the United Nations.
And to add that “ this action includes a set of transformative measures in favor of the SDGs, generated by the collective and concerted efforts of all stakeholders ».
Inflation is expected to decrease to 6.5% in 2023
Thus, the UN report estimates that when some negative trends begin to subside, global growth should register a moderate recovery to reach 2.7% in 2024.
A recovery that will be heavily dependent, the report continues, on the pace and sequence of further monetary tightening, the evolution and consequences of the war in Ukraine as well as possible further disruptions in the supply chain.
The risk of recession in 2023 also hovers over several countries, both developed and developing, due to the current slump, underlines the UN report, which has slowed the economic recovery following the Covid-19 crisis, in a marked context in particular by high inflation and aggressive monetary tightening.
Also, growth momentum has weakened considerably in the United States, the European Union and other developed economies in 2022, which in many ways has negative repercussions for the rest of the world. global economy, raises the report.
Thus, and since the end of 2021, more than 85% of central banks around the world have tightened their monetary policy and raised their interest rates, in rapid succession, in order to control inflationary pressures and avoid the recession, notes the report.
Likewise, global inflation, which has reached its highest level in several decades, at around 9% in 2022, is expected to decline, but remain at a high rate of 6.5% in 2023.
On employment, the report argues that most developing countries experienced a relatively slow job recovery in 2022 and still face a severe shortage of jobs. The disproportionate job losses experienced by women during the initial phase of the pandemic have not been fully compensated, with improvements coming mainly from a resumption of informal jobs.
« It is the most vulnerable who are hardest hit by the current crises, although they are often not responsible for them. The global community must redouble its joint efforts to avert human suffering and foster an inclusive and sustainable future for all said Li Junhua, UN Under-Secretary-General for Economic and Social Affairs.
In this sense, the United Nations calls on governments to avoid implementing fiscal austerity that would stifle growth and disproportionately harm the most vulnerable groups, jeopardize progress in gender equality and hinder intergenerational development prospects.
They are also recommended to reallocate public spending and reprioritize it through direct policy interventions that will create jobs and boost growth.
Social protection systems should also be strengthened, according to the report, by continuing to support them through targeted and temporary subsidies, cash transfers and reductions on utility bills, which might be supplemented by reductions in consumption taxes or customs duties.
Regarding strategic public investments, particularly in education, health, digital infrastructures, new technologies and climate change mitigation and adaptation, according to the report, can offer significant social returns, accelerate productivity growth and building resilience to economic, social and environmental shocks.