UN forecasts global economic growth to slow to 1.9% in 2023


The United Nations forecast Wednesday that global economic growth will drop significantly to 1.9% this year due to the food and energy crisis caused by the war in Ukraine, the continued impact of COVID-19 pandemic, persistently high inflation and climate. emergency situation.

Drawing a bleak and uncertain economic outlook, the United Nations’ Department of Economic and Social Affairs said the current global economic downturn “affects both developed and developing countries.” , with many countries facing a recession in 2023.”

United Nations Secretary-General Antonio Guterres said in the preface to the 178-page report: “A severe and widespread slowdown in the global economy is likely to occur amid high, tight inflation. strong currency and increased uncertainties”.

The report said the forecast for economic growth of 1.9% this year – down from an estimated 3% in 2022 – is one of the slowest growth rates in recent decades. But it expects a moderate increase to 2.7% in 2024 if inflation fades and economic headwinds begin to ease.

In its annual report earlier this month, the World Bank, which lends money to poor countries to fund development projects, cut its growth forecast by nearly half, from its previous forecast of three years. % down to only 1.7%.

The International Monetary Fund, which provides loans to poor countries, forecast in October that global growth would slow from 6% in 2021 to 3.2% in 2022 and 2, 7% by 2023. IMF Managing Director Kristalina Georgieva said at the World Economic Conference last week. Forum in Davos that 2023 will be a tough year, but stuck by forecast and said “we don’t expect a global recession.”

Shantanu Mukherjee, director of economic and policy analysis at the United Nations Economic and Social Commission, highlighted growing income inequality around the world at a press conference announcing the report.

He said that between 2019 and 2021, the average income of the richest 10% increased by 1.2% while the income of the lowest 40% decreased by 0.5%.

“The top 10 percent now earn an average of 42 times more than the bottom percent,” says Mukherjee.

According to the UN report, this year “growth momentum has weakened in the US, European Union and other advanced economies, adversely affecting the rest of the world economy”.

In the United States, GDP is projected to grow by just 0.4% in 2023 after an estimated 1.8% growth in 2022, the United Nations said. And many European countries are predicted to experience “a mild recession” as the war in Ukraine enters its second year on February 14, high energy costs, inflation and tight financial conditions. tightening reduces household consumption and investment.

Economies in the 27-nation European Union are forecast to grow by just 0.2 per cent in 2023, down from an estimated 3.3 per cent in 2022, the United Nations said. And in the United Kingdom, which left the EU three years ago, GDP is projected to shrink 0.8 percent in 2023, continuing the recession that began in the second half of 2022.

With the Chinese government abandoning its COVID-free policy late last year and easing monetary and fiscal policies, the United Nations forecasts that the country’s economy, which grew only 3% in 2019, 2022, will accelerate to 4.8% this year.

“However, the reopening of the economy is expected to be very bumpy,” the UN said. “Growth will likely remain much lower than the pre-pandemic rate of 6-6.5%.”

The United Nations report says Japan’s economy is expected to be among the better-performing developed countries this year, with GDP forecast to grow 1.5%, slightly below the previous level. growth is estimated at 1.6% last year.

Across East Asia, the UN says the economic recovery remains fragile although GDP growth in 2023 is forecast at 4.4%, up from 3.2% last year and stronger than in other regions. is different.

In South Asia, the United Nations forecasts average GDP growth will slow from 5.6% last year to 4.8% this year due to high food and energy prices, “tightening currencies and financial vulnerabilities”. main”.

However, growth in India, which is expected to overtake China this year to become the world’s most populous country, is expected to remain high at 5.8%, less than a year later. slightly below the estimate of 6.4% in 2022, “due to higher interest rates and the global recession”. investment and export considerations,” the UN report said.

In West Asia, oil-producing countries are benefiting from high prices and rising output, as well as a recovery in tourism, the UN says. However, non-oil producer economies remain weak “due to tight access to international finance and severe financial constraints” and average growth in the region is projected. expected to slow from an estimated 6.4% in 2022 to 3.5% this year.

The United Nations says Africa has been hit by “multiple shocks, including weaker demand from key trading partners (especially China and Europe), and sharp increases in food and energy prices.” , rapidly rising borrowing costs and adverse weather events.”

One consequence, the report says, is an increasing debt repayment burden, forcing more and more African governments to seek bilateral and multilateral assistance.

The United Nations forecasts economic growth in Africa will slow from an estimated 4.1 percent in 2022 to 3.8 percent this year.

In Latin America and the Caribbean, the United Nations said the outlook “remains challenging”, citing the labor market outlook, high inflation and other problems. It forecasts that regional growth will slow to just 1.4% in 2023 from an estimated expansion of 3.8% in 2022.

The region’s largest economies – Argentina, Brazil and Mexico – are expected to grow at a very low rate due to tightening financial conditions, weakening exports and vulnerabilities in the economy, the UN said. water”.

For the world’s least developed countries, the UN says growth is projected to be 4.4% this year, about the same as last year but significantly lower than the UN’s target of 7% next year. 2030.

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