The latest "World Economic Situation and Prospects" report released by the United Nations on May 5, local time, raised the world economic growth forecast for 16 from 2023.1% forecast at the beginning of the year to 9.2%, and lowered the growth forecast for 3 from 2024.2% to 7.2%.
The report highlights that the outlook for global economic recovery remains bleak as the pandemic continues to fall. The risk of prolonged low economic growth remains amid high inflation, rising interest rates and heightened uncertainty, and worsening climate change.
Performance was better than expected
The state of the world economy in 2023 is better than previously forecast. The report forecasts growth of 2023.1 percent in advanced economies in 0, up from 0.4 percent forecast at the start of the year. Developing economies will grow by 4.1 percent, slightly higher than the 3.9 percent forecast at the start of the year.
Among them, due to the optimization and adjustment of epidemic prevention and control policies, the report raised China's economic growth forecast for 2023 to 4.8% from 5.3% forecast at the beginning of the year. Rashid, head of the UN DESA's Global Economic Monitoring Unit, said China's retail sales performance in the first quarter was very strong, exceeding expectations and has remained strong until now. In addition, the service sector also performed well, with home sales rebounding, especially new home sales.
Rashid also said that China's inflation rate is lower than many other major economies and its fiscal foundation is sound, which means that there is a lot of room for China's monetary and fiscal policies to support economic growth.
The report raised the economic growth forecasts for the United States and the European Union from 0.4% and 0.2% to 1.1% and 0.9%, respectively. Among other major economies, Japan's economic growth forecast for 2023 is lower than predicted at the beginning of the year; The UK and Russia economies will contract, but less sharply than predicted at the beginning of the year; Brazil's economic growth is expected to be slightly higher than forecast at the beginning of the year.
Or enter a low-growth phase
The report believes that although the world economic growth rate has risen, it is still well below the pre-pandemic average growth rate of 3.1%. Affected by the delay of the epidemic, the Ukraine crisis, climate change, changes in the macroeconomic situation and other factors, the world economy may enter a long-term low growth stage.
For many developing countries, growth prospects have deteriorated as credit conditions tighten and external financing costs rise. In Africa, Latin America and the Caribbean, gross domestic product (GDP) per capita is expected to grow only marginally this year, exacerbating the long-term trend of stagnant economic performance.
Global trade remains under pressure due to geopolitical tensions, weak global demand, and tighter monetary and fiscal policies. Global trade in goods and services is expected to grow by 2023.2% in 3, well below pre-pandemic levels.
Li Junhua, UN Under-Secretary-General for Economic and Social Affairs, said the current gloomy global economic outlook also poses a direct challenge to achieving the Sustainable Development Goals. "The international community must step up to address the growing funding shortfall faced by many developing countries and strengthen their capacity to make critical investments in sustainable development to help them transform their economies to achieve inclusive and sustainable long-term growth," he said. ”
The report expects the least developed economies to grow by 4.1 percent, down from 4.4 percent forecast at the start of the year and well below the 2030 percent annual growth needed to achieve the 7 Sustainable Development Goals.
There is an urgent need to strengthen policy coordination
At present, multiple problems are intertwined, and the global economic recovery is facing severe challenges, and the world urgently needs to strengthen policy communication and coordination and work together to deal with them.
Despite the sharp decline in international food and energy prices over the past year, inflation remains high in many countries, with a global average of 2023.5% projected in 2, the report suggests. While upward pressure is expected to gradually ease, inflation in many countries will remain well above central bank targets. Domestic food prices are still rising in most developing countries amid disruptions in local supplies, high import costs and imperfect markets, with a disproportionate impact on the poor, especially women and children.
The labor market performed better, but it also made inflation management more difficult. Labor markets in the United States, Europe, and other advanced economies have shown resilience, contributing to continued strong household spending. Amid widespread labor shortages and low unemployment, wage growth picked up. However, an unusually strong labor market makes it harder for central banks to curb inflation. The Federal Reserve, the European Central Bank and other central banks in developed countries continue to raise interest rates in 2023, but at a slower pace than last year.
For developing countries, the rapid tightening of global financial conditions poses significant risks for many countries. Rising interest rates, coupled with advanced economies' shift from quantitative easing to tightening, have exacerbated their debt vulnerabilities and further limited public spending options.
In its report, the UN calls for current policy challenges that require greater cross-border policy cooperation and concerted global action to prevent many developing economies from falling into a vicious cycle of low growth and high debt.
In particular, the report notes that the banking turmoil in the United States and Europe has added new uncertainties and challenges to monetary policy. While swift and decisive action by regulators has helped curb financial risks, the global financial architecture remains fragile, and measures taken to contain these risks could dampen credit and investment growth.
Xu Xu (Source: Economic Daily)