This will be one of the lowest growth rates in decades, barring the 2007-2008 financial crisis and the peak of the crisis COVID-19 Pandemic.
“In most countries we expect private consumption and investments to weaken because of 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 slight recession before growth is forecast in the second half of this year and until 2024”.
The results come against the background of the pandemic, the war in Ukraine and the resulting food and energy crisis, rising inflation, the tightening of debt and the climate emergency.
In the short term, the economic outlook is bleak and uncertain as global growth is expected to moderately increase to 2.7 percent by 2024.
However, this is highly dependent on the pace and sequencing of further monetary tightening – rising interest rates – the fallout from the war in Ukraine and the possibility of further supply chain disruptions.
Stronger fiscal measures required
The report warns that the results also jeopardize the achievement of the 17 Sustainable Development Goals (SDGs).
“This is not the time for short-term thinking or knee-jerk austerity this exacerbates inequality, increases suffering and could push the SDGs further out of reach. These unprecedented times call for unprecedented action,” said UN Secretary-General António Guterres.
“This promotion includes a transformative SDG stimulus packagegenerated by the collective and coordinated efforts of all stakeholders,” he added.
Slow growth, high inflation and mounting debt burdens threaten hard-won progress towards global goals.
Gloomy economic prospects
According to the report, both developed and developing countries are at risk of recession this year.
Growth momentum has slowed significantly in the United States, the European Union and other developed economies in 2022. This was detrimental to the rest of the world economy in a number of ways.
Tightening global financial conditions coupled with a strong dollar exacerbated financial and debt vulnerabilities in developing countries.
The analysis found that since late 2021, over 85 percent of the world’s central banks have tightened monetary policy and hiked interest rates in rapid succession to tame inflationary pressures and avoid a recession.
Global inflation, which hit a decade-high of around 9 percent in 2022, is expected to ease but will remain elevated at 6.5 percent in 2023.
Weaker employment recovery, rising poverty
The report found that most developing countries experienced a slower employment recovery in 2022 and continue to face relatively high unemployment.
Disproportionate losses in women’s employment during the initial phase of the pandemic have not been fully reversed, with improvements mainly due to a recovery in the informal sector.
Slower growth, coupled with higher inflation and increasing debt vulnerabilities, threaten to further set back hard-won achievements in sustainable development, she warns.
Women who are part of a women farmers’ cooperative supported by UNICEF and other UN agencies tend to their crops in Chipata, Zambia.
need lift
DESA points out that by 2022 the number of people with acute food insecurity will have increased more than doubled compared to 2019 and reached almost 350 million.
A prolonged period of economic weakness and slow income growth would not only hamper poverty eradication but also limit countries’ ability to invest more fully in the SDGs, it said.
“The global community must increased joint efforts to avert human suffering and support an inclusive and sustainable future for all,” said Li Junhua, United Nations Under-Secretary-General for DESA.
key to international cooperation
The report urges governments to avoid austerity measures that would stifle growth and disproportionately hit the most vulnerable groups, as well as hamper progress on gender equality and development prospects across generations.
It calls for a reallocation and reprioritization of public spending policies through direct interventions that will create jobs and revitalize growth.
This requires strengthening social protection systems and ensuring continued support through targeted and temporary subsidies, cash transfers and rebates on utility bills, and can be complemented with cuts in excise taxes or tariffs, it says.
Invest in people
The report points this out strategic public investments in education, health, digital infrastructurenew technologies and mitigation and adaptation to climate change to generate large social returns, accelerate productivity growth and build resilience to economic, social and environmental shocks.
It estimates that additional SDG financing needs in developing countries amount to several trillions of dollars per year.
Greater international engagement is urgently needed to expand access to emergency financial assistance; restructuring and debt reduction in developing countries; and expand SDG funding, the report warns.
Based on estimates and forecasts generated using the World Economic Forecasting Model.
