Saturday, January 28, 2023

The UN lowers its growth forecast for the world economy to 1.9%

The United Nations (UN) on Wednesday lowered its growth forecast for the world economy to 1.9% in 2023 due to a sharp slowdown in the United States and Europe.

The figure represents a clear cut compared to previous projections prepared by the United Nations, which last May forecast growth of 3.1% for this year.

Looking ahead to 2024, the international organization expects that the effect of factors such as inflation and interest rate increases adopted to contain prices will already be softer and that the global economy will grow at a rate of 2.7%.

However, he warns that this evolution is still very uncertain and will depend on the adjustments in monetary policy, what happens in the war in Ukraine and the possibility of more problems in the supply chain.

Slowdown in the US and Europe

This year, the slowdown will be especially significant in some of the world’s most advanced economies, such as the United States and the European Union (EU).

The UN expects the US gross domestic product (GDP) to grow just 0.4% in 2023 and 1.7% in 2024, with lower consumption resulting from high interest rates and a loss of purchasing power for households .

In the EU, expectations are for growth of 0.2% this year and 1.6% next year, a sharp drop from previous forecasts that is explained by the consequences of the war in Ukraine.

Several European countries – including Germany and Italy – will suffer small recessions in 2023, mainly as a result of high energy prices, inflation and more difficult financial conditions for consumers.

In the case of Spain, the UN forecasts growth of 0.9% this year and 2.2% next, while it expects the UK economy to contract by 0.8% in 2023 and to progress by 1% in 2024.

Worsening in almost everyone

The complex economic situation will be felt by most of the world, as the so-called transition economies are expected to contract by 0.8% this year, led by Russia, down 2.9%.

In China, the lifting of many of the restrictions imposed to combat covid-19 will accelerate growth to 4.8% this year compared to 3% in 2022, but the UN warns that the reopening of the economy will be complicated and that the Asian giant will be far from recovering the pace prior to the pandemic.

In developing countries as a whole, growth of 3.9% this year and 4.1% next year is expected, but with very different figures depending on the region.

For example, while South Asia will grow by 4.8% and 5.9%, Latin America and the Caribbean will only grow by 1.4% and 2.5%, respectively.

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