The United Nations cut the global economic growth forecast to 1.9% for 2023 in its report released on Wednesday. The previous estimate was for 3.2% growth.
The food and energy crisis from the Ukraine war, the impact of the COVID-19 pandemic, high inflation, and climate energy are the causal factors for the fall in growth rate.
2023 is expected to see the lowest growth rate in decades, excluding the financial crisis of 2007-8.
“In most countries we expect that private consumption and investment will weaken due to inflation and higher interest rates”, said Ingo Pitterle, Senior Economist at the UN Department of Economic and Social Affairs (UNDESA). “Several countries will see a mild recession before growth is forecast to pick up in the second half of this year and into 2024”, in the report.
The forecast for 2024 growth is at 2.4% provided there is moderate growth of economic activity.
The global interest rate reached a high of 9% in 2022 and is forecasted to reduce to 6.5% in 2023 as per the report.
The report advises countries for international cooperation to solve economic problems. The countries must focus on systemic improvement from a fundamental level to ensure that economic growth is sustainable.
António Guterres, UN Secretary-General said, “This is not the time for short-term thinking or knee-jerk fiscal austerity that exacerbates inequality, increases suffering and could put the SDGs farther out of reach. These unprecedented times demand unprecedented action,”
The report advises countries to invest in their citizen resource by investing in education, digital infrastructure, health, latest technologies with Sustainable Development Goals (SDG).
The forecast for growth in India is reduced to 5.8% for 2023 from 6.4% in 2022. The Chinese economy has received a positive growth forecast of 4.8% from its 3.0% in 2022. The forecast for America is shrinking from 1.8% in 2022 to 0.4% in 2023 while the European Union forecast is tightening to 0.2% from 3.3% in 2022.
The pandemic has struck severe blows like the disproportionate loss in female employment which has not completely recovered. Businesses are opting to downsize to increase profitability adding to the already high unemployment numbers.
The prolonged war between Russia and Europe has increased the risk of food security as Ukraine was called the ‘Wheat basket of the world’.
The UN forecast is gloomy for economic growth around the world unless issues like inflation, unemployment, and poverty begin to reduce.
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