Global Economic Growth To Fall to 1.9% In 2023 - UN Forecasts

The international economic growth is likely to fall to 1.9% in the year 2023 according to the recent forecast performed by the United Nations as a combined result of the food & energy scarcity triggered by the war in Ukraine & Russia, the continuous effect of the Coronavirus pandemic, constant high inflation, and the climate emergency.

Delivering a shadowy and doubtful economic perspective, the UN Department of Economic and Social Affairs stated that this existing global economic growth “cuts across both developed and developing nations, with many struggling with risks of recession in 2023.”

“A wide-ranging and extreme slowdown of the global economy poses a potential threat amid high inflation, aggressive monetary tightening, and increased uncertainties, ” UN Secretary-General Antonio Guterres stated in a foreword to the 178-page report. But climate change activities can speed up the global economy, economists say.

As per the reports, the 1.9% economic growth prediction for this year down from an expected 3% in 2022 - is one of the lowest development rates in recent decades. But it estimates an average lift of up to 2.7% in 2024 if inflation gradually decreases and economic flow starts to ease. Earlier, the United Nations raised its global economic forecast to 5.4% growth for 2021. 

In its yearly report recently, the World Bank, which facilitates loans to needy nations for development schemes, cuts its development forecast close to half, from its earlier estimation of 3% to just 1.7%.

Along with this, the International Monetary Fund which provides lending to poor nations predicted in October that international growth would decrease from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. According to the IMF Managing Director Kristalina Georgieva’s statement at last week's World Economic Forum in Davos, 2023 will be a challenging year, but they stuck by the estimation and said, “We don’t anticipate a worldwide recession.”

Shantanu Mukherjee, director of the economic analysis and policy division of the U.N. The Department of Economic and Social Affairs featured the increasing income inequality worldwide at a news conference launching the report.

Between 2019 and 2021, he stated, average incomes for the top 10% increased by 1.2% while the incomes of the lowest 40% decreased by 0.5%.

“The top 10% now procures on average over 42 times what the lowest percentiles” earn, Mukherjee explained.

As indicated by the U.N. report, this year “growth drive has weakened in the United States, the European Union, and other developed nations, adversely affecting the remaining world economy.”

In the United States, GDP growth is estimated to extend by only 0.4% in 2023 after a projected growth of 1.8% in 2022, the UN stated while many of the European nations are estimated to witness a “slight recession” with the war in Ukraine entering into its second year on Feb 14, increased energy costs, and inflation and tighter financial conditions disrupting household consumption and investment.

Additionally, the economical conditions in the 27-nations European Union are estimated to rise by just 0.2% in 2023, down from an estimated 3.3% in 2022, as per the UN’s statement. And in the United Kingdom, which left the EU quite a while back, GDP is estimated to decrease by only 0.8% in 2023, proceeding with a downturn that started in the second half of 2022, it stated.

With China's government leaving its zero-Coronavirus strategy last year and loosening its monetary and fiscal policies, the UN estimates that its economy, which extended by only 3% in 2022, will increase to 4.8% this year.
“But the return of the economy is expected to be rough.” the UN stated. “Development will likely remain well underneath the pre-pandemic pace of 6-6.5%”.

The UN stated that Japan’s economy is supposed to be among the better-performing among developed nations this year, with GDP estimation to increase by 1.5%, slightly lower than last year's assessed development of 1.6%.

Across east Asia, the UN stated economic recovery stays delicate however Gross domestic product development in 2023 is predicted to reach 4.4%, up from 3.2% last year, and better than in other regions.

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In South Asia, the UN estimates average GDP growth will decrease from 5.6% last year to 4.8% this year due to high food & energy expenses, “monetary tightening, and fiscal vulnerabilities.”

But when it comes to India, the growth is estimated to overtake China this year as the world’s most populous country, is expected to remain strong at 5.8%, slightly lower than the predicted 6.4% in 2022, “as higher interest rates and an international slowdown weigh on investments and exports,” the UN report stated.

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In Western Asia, oil-producing nations are benefiting from excessive costs and rising results as well as a recovery in tourism, the UN stated. But nations that aren’t oil producers stay frail “given tight access to international finance and extreme fiscal requirements.” and average development in the region is estimated to decrease from a projected 6.4% in 2022 to 3.5% this year.

The UN stated that Africa has been affected by “multiple threats, including fragile demand from essential trading associates (especially China & Europe), a sharp expansion in energy and food prices, quickly rising borrowing costs and worst weather events.”

One result, it stated, is imposing debt-servicing threats that have compelled many African governments to obtain bilateral and multilateral help.

The UN estimated economic growth in Africa to decrease from an estimated 4.1% in 2022 to 3.8% this year.

In Latin America and the Caribbean, the U.N. stated outlook “stays challenging”, referring to labor market possibilities, difficult high inflation, and other issues. It estimates that regional development will decrease to just 1.4% in 2023 from a projected expansion of 3.8% in 2022. 

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“The region’s largest economies - Argentina, Brazil, and Mexico - are projected to develop at a very low rate due to tightening financial situations, fragile exports, and domestic weaknesses.” the UN stated.

For the world’s least developed nations, the UN stated that the growth is estimated at 4.4% this year, about the same as last year but essentially beneath the UN's objective of 7% by 2030.