UN predicts risk of low long-term growth in world economy
Although the United Nations (UN) raised its global economic growth forecast for this year by 0.4 percentage points to 2.3 percent, it forecast a long-term risk of low growth in the world economy.
The UN has updated the report “World Economic Situation and Prospects 2023” published in January.
According to the report, the global economy faces widening financing gaps, stagnant investment and increasing debt vulnerabilities. This threatens sustainable development.
In addition, the world economy faces the risk of low growth in the long term due to the effects of the Covid-19 epidemic, the war between Russia and Ukraine, climate change and changing macroeconomic conditions.
INFLATION HAS BEEN HARD TO CONTROL
According to the UN report, high inflation in both developed and developing countries after Covid-19 led to the most aggressive interest rate hikes in the last 10 years, while despite rate hikes interest rates, central banks, especially in developed economies, kept up inflation. under control while maintaining the resilience of household spending and employment.
Therefore, the slowdown in global economic growth is likely to be greater than previous estimates due to strong household spending in the largest economies, especially in the US and the European Union, as well as the recovery of the chinese economy.
In this context, the global economic growth forecast for 2023, which in January was 1.9 percent, increased by 0.4 percentage points to 2.3 percent. The forecast for 2024 was lowered by 0.2 points to 2.5 percent.
THE GROWTH OF THE WORLD ECONOMY FAILED
“Despite this increase, the growth rate of the global economy is still well below the average growth rate of 3.1 percent in the two decades preceding the Covid-19 pandemic,” the report said. Evaluation was also included.
Meanwhile, in the report, the growth forecast for the US, which was 0.4% in January, was raised to 1.1% due to strong household spending, and the growth forecast for the EU , which was 0.2%, was increased to 0.9%. . The economic growth forecast for China, the world’s second-largest economy, was revised to 5.3 percent from 4.8 percent.
BAD EXPECTATIONS FOR DEVELOPING COUNTRIES
The report emphasized that economic growth prospects for many developing countries worsened due to tightening credit conditions and rising external financing costs.
The least developed countries are expected to grow by 4.1% in 2023 and 5.2% in 2024. This is well below the UN growth target of 7% set out in the UN 2030 Sustainable Development Goals . (AA)