NEW YORK: The world economy risks suffering a slowdown in 2020 that would derail efforts to tackle the mounting climate emergency and heightened poverty around the world, the United Nations warned.
“Impacted by prolonged trade disputes, the global economy suffered its lowest growth in a decade, slipping to 2.3 percent in 2019… however, (the world) could see a slight uptick in economic activity in 2020 if risks are kept at bay,” United Nations said in its flagship World Economic Situation and Prospects (WESP) 2020 report.
The report states that growth of 2.5 percent in 2020 is possible, “but a flareup of trade tensions, financial turmoil, or an escalation of geopolitical tensions could derail a recovery”. In a downside scenario, global growth would slow to just 1.8 percent this year.”
It said a prolonged weakness in global economic activity may cause significant setbacks for sustainable development, including the goals to eradicate poverty and create decent jobs for all.
“At the same time, pervasive inequalities and the deepening climate crisis are fueling growing discontent in many parts of the world.”
UN Secretary-General António Guterres warned that these risks could inflict severe and long-lasting damage on development prospects. “They also threaten to encourage a further rise in inward-looking policies, at a point when global cooperation is paramount.”
GDP growth in the United States is forecast to slow from 2.2 percent in 2019 to 1.7 percent in 2020. In the European Union a modest rise in GDP growth from 1.4 percent in 2019 to 1.6 percent in 2020 is expected.
East Asia remains the world’s fastest growing region and the largest contributor to global growth. “In China, GDP growth is projected to moderate gradually from 6.1 percent in 2019 to 6.0 percent in 2020 and 5.9 percent in 2021, supported by more accommodative monetary and fiscal policies.” Growth in other large emerging countries, including Brazil, India, Mexico, the Russian Federation and Turkey, is expected to gain some momentum in 2020.
The report said progress towards higher living standards has stalled for many Africa has experienced a decade of near stagnation in per capita GDP and many countries around the world are still ailing from the effects of the commodity price downturn of 2014-16, which resulted in persistent output losses and setbacks in poverty reduction.
“In one-third of commodity-dependent developing countries (home to 870 million people), average real incomes are lower today than they were in 2014. This includes several large countries such as Angola, Argentina, Brazil, Nigeria, Saudi Arabia and South Africa.”
The UN said the number of people living in extreme poverty has risen in several sub-Saharan African countries and in parts of Latin America and Western Asia.
UN estimates indicate that to eradicate poverty in much of Africa, annual per capita growth of over 8 percent would be needed, compared to the just 0.5 percent average rate over the past decade.
The report said the climate crisis, persistently high inequalities, and rising levels of food insecurity and undernourishment continue to affect the quality of life in many societies.
“Policymakers should move beyond a narrow focus on merely promoting GDP growth, and instead aim to enhance well-being in all parts of society,” Elliott Harris, UN Chief Economist said. “This requires prioritising investment in sustainable development projects to promote education, renewable energy, and resilient infrastructure.”