ILO Photo/Yacine Imadalou     Shop workers sell bread at a bakery in Constantine, Algeria during the COVID-19 pandemic.

May 16, 2023   Economic Development

Prospects for a robust global economic recovery remain dim as the lingering effects of the COVID-19 pandemic carry on, according to the UN’s latest World Economic Situation and Prospects report, released on Tuesday.

Risks of a prolonged period of low growth stand, amid stubborn inflation, rising interest rates, and heightened uncertainties, in addition to the ever-worsening impact of climate change, the report found.

Challenging development

The current global economic outlook also presents an immediate challenge to delivering on the Sustainable Development Goals (SDGs), said Li Junhua, Under-Secretary-General for the Department of Economic and Social Affairs (DESA).

“The global community must urgently address the growing shortages of funding faced by many developing countries, strengthening their capacities to make critical investments in sustainable development and helping them transform their economies to achieve inclusive and sustained long-term growth,” he said.

According to the report, the world economy is now projected to grow by 2.3 per cent in 2023 and 2.5 per cent in 2024, a slight uptick in the global growth forecast for 2023, according to the report, which is produced by DESA.

Regional impact

In the United States, resilient household spending has prompted upward revision of the growth forecast to 1.1 per cent in 2023.

Driven by lower gas prices and robust consumer spending, the European Union’s economy is now projected to grow by 0.9 per cent. As a result of COVID-19 related restrictions being lifted, China’s growth in 2023 is now forecast to be 5.3 per cent.

Sombre picture lingers

Despite this uptick, the growth rate is still well below the average growth rate in the two decades before the pandemic, of 3.1 per cent.

For many developing countries, growth prospects have deteriorated amid tightening credit conditions and rising costs of external financing. In Africa and Latin America and the Caribbean, gross domestic product (GDP) per capita is projected to increase only marginally this year, reinforcing a longer-term trend of stagnating economic performance.

The least developed countries are forecast to grow by 4.1 per cent in 2023 and 5.2 per cent in 2024, far below the seven per cent growth target set in the 2030 Agenda for Sustainable Development.

Global trade remains under pressure due to geopolitical tensions, weakening global demand and tighter monetary and fiscal policies. The volume of global trade in goods and services is forecast to grow by 2.3 per cent in 2023, well below the pre-pandemic trend.