Advertisement

UN says prospects dim for robust global economic recovery despite uptick for US, EU and China

UNITED NATIONS (AP) — The United Nations on Tuesday forecast a slight uptick in economic growth in the United States, the European Union and China, but said prospects for a robust global economy recovery this year remain dim, pointing to stubbornly high inflation, the lingering effects of the COVID-19 pandemic, war in Ukraine, and the worsening impact of climate change.

The U.N. Department of Economic and Social Affairs said in its mid-2023 report on economic expectations for the year that “uncertainties and poor growth prospects continue to bedevil the world economy.” For many developing countries, it said, growth prospects have deteriorated amid tightening credit conditions and rising costs of external financing.

According to the report, the world economy is now expected to grow by 2.3%, up from the U.N.’s forecast of 1.9% on Jan. 25, but still well below the estimated 3.1% in 2022.

Global inflation is now projected to decline from 7.5% last year to 5.2% this year.

In the United States, “resilient household spending” this year led the U.N. to increase its 2023 forecast from 0.4% in January to 1.1%. In the European Union, lower gas prices and robust consumer spending led to an increase in projected growth this year from 0.2% in January to 0.9%. And as a result of China’s lifting of COVID-19 restrictions, its economic growth is now forecast to increase from 4.8% to 5.3% in 2023, the U.N. said.

But Shantanu Mukherjee, who heads the U.N.'s economic analysis and policy division, told reporters at a news conference launching the report, that its forecast is “worrying” because even with the modest improvements in the three major economies, growth remains “well below the average that we had over the last 20 years which was about 3.1%.”

Even more worrying, he said, is the impact of the pandemic, mounting debt especially in developing countries, dimming prospects for investment, and structural problems that will continue low growth levels.

On April 5, International Monetary Fund chief Kristalina Georgieva said the world economy is expected to grow less than 3% this year, down from 3.4% last year, increasing the risk of hunger and poverty globally.

She said the period of slower economic activity will be prolonged, with the next five years of growth remaining around 3%, calling it “our lowest medium-term growth forecast since 1990, and well below the average of 3.8% from the past two decades.”

The U.N.’s Mukherjee said that while improved growth prospects for the U.S., EU and China are driving a lot of change, the growth in per capita income “remains really low in many developing regions.”

Over the two decades prior to the COVID-19 pandemic, growth per person was just 1.2% in Latin America and the Caribbean, 1.8% in Western Asia and 1.9% in Africa, he said. “In 2023, all of these regions fall well short of even these lower levels.”

Mukherjee said this is “a real cause of concern” for regions where most poor people live. Coupled with higher inflation in many developing countries, he said, there is “a greater risk for poverty and hunger,” with evidence already showing that women and children are being negatively impacted.