UNITED NATIONS, May 16 (Xinhua) -- The world economy faces the risk of a prolonged period of low growth as a result of legacy effects of COVID-19, the Ukraine crisis, climate change, and shifting macroeconomic conditions, even as the immediate global picture shows slight improvement, according to a UN report released on Tuesday.
Stubbornly high inflation in both developed and developing countries in the aftermath of the pandemic prompted the most aggressive interest rate hikes in decades. Despite rising rates, household spending and employment, especially in the developed economies, have remained resilient, making it harder for central banks to tame inflation, according to a mid-year update of the January 2023 World Economic Situation and Prospects report.
Against this backdrop, the deceleration in global growth for 2023 is likely to be less severe than previously anticipated, mainly due to persistently robust household spending in the largest economies, especially in the United States and the European Union, as well as the recovery in China, says the report.
Global growth is now projected at 2.3 percent for 2023, an uptick from the 1.9 percent forecast in the January report. The mid-year update revises down global growth for 2024 to 2.5 percent from 2.7 percent.
In the United States, resilient household spending has prompted an upward revision of growth forecast to 1.1 percent for 2023 from 0.4 percent in the January prediction. The European Union's economy is now projected to grow 0.9 percent instead of 0.2 percent. China's growth this year is revised up to 5.3 percent from 4.8 percent.
Despite this uptick, the global growth rate is still well below the average growth rate of 3.1 percent in the two decades before the pandemic. For many developing countries, growth prospects have deteriorated amid tightening credit conditions and rising costs of external financing, says the report.
In Africa and Latin America and the Caribbean, per capita gross domestic product is projected to increase only marginally this year. The least developed countries are forecast to grow by 4.1 percent in 2023 and 5.2 percent in 2024, far below the 7 percent growth target set in the 2030 Agenda for Sustainable Development, it says.
The current global economic outlook presents an immediate challenge to delivering on the Sustainable Development Goals, said Li Junhua, UN undersecretary-general for economic and social affairs, in a press release.
"The global community must urgently address the growing shortages of funding faced by many developing countries, strengthening their capacities to make critical investments in sustainable development and helping them transform their economies to achieve inclusive and sustained long-term growth," he said.
The mid-year update and the January report were prepared by the UN Department of Economic and Social Affairs, which Li leads.
