The Unassuming Economist

Source: United Nations Department of Economic and Social Affairs

“Global economic recovery hinges on a delicate balance amid new waves of COVID-19 infections, persistent labour market challenges, lingering supply-chain constraints and rising inflationary pressures”, reads the recently released report by the UN. The world economy is projected to grow by 4 percent in 2022 and 3.5 percent in 2023. Some excerpts from the report are as presented underneath:

The good: Half of the world’s economies will exceed pre-pandemic levels of output by at least 7 percent in 2023. In East Asia and South Asia, the average gross domestic product (GDP) in 2023 is projected to be 18.4 percent above its 2019 level, compared to only 3.4 percent in Latin America and the Caribbean. Besides, global investment expanded by an estimated 7.5 percent in 2021 (after contracting by 2.7 percent in 2020) driven by growth in China and the United States. As regards poverty, the number of people living in extreme poverty globally is projected to decrease slightly to 876 million in 2022 but is expected to remain well above pre-pandemic levels. Fast-developing economies in East Asia and South Asia and developed economies are expected to experience some poverty reduction.

The not so good: Despite a robust recovery, East Asia and South Asia’s GDP in 2023 is projected to remain 1.7 percent below the levels forecast prior to the pandemic, while these figures stand at 5.5 and 4.2 percent for Africa, and Latin America and the Caribbean, respectively. Labour markets have contracted severely, and full recovery in developed economies is only projected to happen by 2023 or 2024.

The risks: Limited access to vaccines poses a particular challenge to most developing countries and transition economies. Rising inflationary pressures in major developed economies and a number of large developing countries present additional risks to recovery. Global headline inflation rose to an estimated 5.2 percent in 2021, more than 2 percentage points above its trend rate in the past 10 years. The inflationary pressure was particularly pronounced in the United States, the euro area and Latin America and the Caribbean. Higher levels of inequality within and between countries, and against vulnerable populations like women, is one of the greatest risks to the social fabric as suggested by the report.

Read the full report for in-depth forecasts on issues like the state of multilateralism, asset price bubbles, monetary policy, healthcare crises, and climate change.

Also Read:

World Bank’s Global Economic Prospects 2022 Report