Geneva, 26 January 2023 (TDI): United Nations (UN) economists warned that in 2023, the global growth forecast would slow down to 1.9 percent.
This would likely add more damage to the global economy. Already the growth has been slowed down to three percent in 2022.
UN Department of Economic and Social Affairs (UNDESA)
This would be the lowest growth rate in recent decades, apart from during the 2007-8 financial crisis and the height of the COVID-19 pandemic.
Private consumption and investment would be weakened due to inflation in most of the countries, said Ingo Pitterle, Senior Economist at the UN Department of Economic and Social Affairs (UNDESA).
Overall, the economic outlook is gloomy and uncertain. The global growth forecast would revive slowly to 2.7 percent in 2024.
This is dependent on the fluctuation of monetary tightening. That depends upon the interest rates, the consequences of the war in Ukraine, and the possibility of further supply-chain disturbances.
Need for Stronger Fiscal Measures
According to the UN report, the achievement of 17 Sustainable Development Goals (SDGs) would also be affected.
António Guterres, UN Secretary-General, said that “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 action would include a stimulus package for SDGs that would be generated through the collective and concerted efforts of all stakeholders.
Slow growth, high inflation, and mounting debt burdens are threatening gains of SDGs.
Gloomy Economic Outlook
The prospect of recession is threatening for the developed as well as developing world. In 2022, the growth momentum remained in a continuous decline in the United States, the European Union, and other developed economies. This left adverse impacts on the rest of the global economy in multiple ways.
The global financial conditions are in tightening along with a strong dollar, exacerbating fiscal and debt vulnerabilities in developing countries.
Over 85 percent of the central banks worldwide tightened monetary policy and raised interest rates. In a succession since late 2021, to control inflationary pressures and to avoid a recession.
The combined global inflation rate reached 9 percent in 2022 and would remain elevated globally at 6.5 percent in 2023.
Rising Poverty and Weaker Job Recovery
The report assessed that most of the developing countries, in 2022, experienced slower job recovery Moreover, continued to face relatively high levels of unemployment.
There occurred disproportionate losses in women’s employment during the initial phase of the pandemic. This has not been fully reversed yet, though improvements arose from a recovery in the informal sector.
Slower growth along with elevated inflation and mounting debt vulnerabilities further threatens set back to hard-won achievements in sustainable development.
UNDESA also pointed out that in 2022, the number of people facing acute food insecurity, reaching almost 350 million. That is more than as compared to 2019.
The prolonged period of economic crisis and slow income growth hampered poverty eradication efforts. This is also a hurdle in the way of achieving the SDGs more broadly.
Li Junhua, United Nations Under-Secretary-General for UNDESA, said that “The global community needs to step up joint efforts to avert human suffering and support an inclusive and sustainable future for all.”
International Cooperation a Key
According to UNDESA, governments should avoid fiscal austerity measures because that would stifle growth as this would disproportionately affect the most vulnerable groups, & hinder progress in gender equality & development prospects, for generations.
The report calls for reallocation and reprioritization in public spending policy, through direct interventions. That would create jobs and reinvigorate growth. This would also strengthen the social protection systems and ensure continued support.
Through targeted and temporary subsidies, cash transfers, and discounts on utility bills that could be complemented with reductions in consumption taxes or customs duties, it states.
Investing in People
Strategic public investments are required in education, health, digital infrastructure, new technologies, and climate change mitigation and adaptation.
This help to achieve large social returns, accelerate productivity growth, and strengthen resilience to economic, social, and environmental shocks.
Moreover, according to the report, additional SDG financing needs in developing countries, amount to several trillion dollars per year.
Similarly, urgent stronger international commitment is urgently needed. To expand access to emergency financial assistance, restructure and reduce debt burdens across developing countries, and scale up SDG financing.