UN forecasts decrease in global economic growth to 1.9 percent

UNITED NATIONS

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The United Nations has forecast that global economic growth will fall significantly to 1.9 percent this year as a result of the food and energy crisis sparked by the war in Ukraine, the impact of the COVID-19 pandemic, persistently high inflation and the climate emergency.

Painting a gloomy and uncertain economic outlook, the U.N. Department of Economic and Social Affairs said the current global economic slowdown “cuts across both developed and developing countries, with many facing risks of recession in 2023.”

“A broad-based and severe slowdown of the global economy looms large amid high inflation, aggressive monetary tightening, and heightened uncertainties,” U.N. Secretary-General Antonio Guterres said in a foreword to the 178-page report.

The report said this year’s 1.9 percent economic growth forecast, down from an estimated 3 percent in 2022, is one of the lowest growth rates in recent decades. But it projects a moderate pick-up to 2.7 percent in 2024 if inflation gradually abates and economic headwinds start to subside.

Shantanu Mukherjee, director of the economic analysis and policy division of the U.N. Department of Economic and Social Affairs, highlighted the growing income inequality in the world at a news conference launching the report.

Between 2019 and 2021, he said, average incomes for the top 10 percent rose by 1.2 percent while the incomes of the lowest 40 percent fell by 0.5 percent.

“The top 10 percent now earns on average over 42 times what the lowest percentiles” earn, Mukherjee said.

According to the U.N. report, this year “growth momentum has weakened in the United States, the European Union and other developed economies, adversely affecting the rest of the world economy.”

In the United States, GDP is projected to expand by only 0.4 percent in 2023 after estimated growth of 1.8 percent in 2022, the U.N. said. And many European countries are projected to experience “a mild recession” with the war in Ukraine heading into its second year on Feb. 14, high energy costs, and inflation and tighter financial conditions depressing household consumption and investment.

The economies in the 27-nation European Union are forecast to grow by just 0.2 percent in 2023, down from an estimated 3.3 percent in 2022, the U.N. said. And in the United Kingdom, which left the EU three years ago, GDP is projected to contract by 0.8 percent in 2023, continuing a recession that began in the second half of 2022, it said.

With China’s government abandoning its zero-COVID policy late last year and easing monetary and fiscal policies, the U.N. forecast that its economy, which expanded by only 3 percent in 2022, will accelerate to 4.8 percent this year.

“But the reopening of the economy is expected to be bumpy,” the U.N. said. ”Growth will likely remain well below the pre-pandemic rate of 6-6.5 percent.”

The U.N. report said Japan’s economy is expected to be among the better-performing among developed countries this year, with GDP forecast to increase by 1.5 percent, slightly lower than last year’s estimated growth of 1.6 percent.