World Economic Outlook and Situation 2020: Executive Summary
The UN notes that the economic growth outlook for 2020 depends on the reduction of trade conflicts and uncertainty
One in five countries will experience a stagnation or decline in per capita income this year
Due to the impact of prolonged trade conflicts, the global economy has experienced its lowest growth in a decade, representing a reduction of 2.3% in 2019. The world, however, could see a rebound in economic activity in 2020 if risks are contained, according to the United Nations World Economic Situation and Outlook (WESP) 2020 report published today.
This report states that it is possible to experience growth of 2.5% in 2020, but that the revival of trade tensions, financial instability or the intensification of geopolitical tensions could thwart such a recovery. In a negative scenario, global growth would slow down to just 1.8% this year. Prolonged fragility of global economic activity can lead to major setbacks for sustainable development, including the goals of eradicating poverty and creating decent jobs for all. At the same time, prevailing inequalities and the worsening climate crisis are fueling growing discontent in many parts of the world.
“Amid growing discontent over the lack of inclusive growth, the demand for change is spreading across the world. Greater attention must be paid to the implications of policy measures on distribution and environmental issues, ”adds Mr Harris.
The Secretary General of the United Nations, António Guterres, warned that “these risks could inflict serious and lasting damage to development prospects. They also threaten to encourage a greater prevalence of inward-oriented policies, at a time when global cooperation is essential. ‘
In the United States, the recent reduction in interest rates by the country’s Federal Reserve may provide some support for economic activity. However, given continuing political uncertainty, weak business confidence and declining fiscal stimulus, GDP growth in the United States is expected to slow from 2.2% in 2019 to 1.7% in 2020. In the Union In Europe, global uncertainty will continue to hold back the manufacturing sector, but will be partially offset by stable growth in private consumption, allowing a modest increase in GDP growth from 1.4% in 2019 to 1.6% in 2020 .
Despite significant headwinds, East Asia continues to be the fastest growing region of the world and the largest contributor to global growth, according to the aforementioned report. In China, GDP growth is forecast to gradually moderate from 6.1% in 2019 to 6.0% in 2020 and 5.9% in 2021, supported by more accommodative monetary and fiscal policies. Growth in other large emerging countries, such as Brazil, India, Mexico, the Russian Federation and Turkey, is expected to gain some momentum in 2020.
For many, progress towards a better quality of life has stalled
Africa has experienced a decade of near stagnation in per capita GDP growth and many countries around the world continue to be weakened by the effects of falling commodity prices from 2014 to 2016, resulting in losses of constant production 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.
At the same time, the number of people living in extreme poverty has increased in different countries of sub-Saharan Africa and in some areas of Latin America and Western Asia. Sustained progress towards poverty reduction will require a significant boost to productivity growth and firm commitments to address high levels of inequality. UN estimates indicate that eradicating poverty in much of Africa would require annual per capita growth of more than 8%, compared with an average rate of just 0.5% over the past decade.
GDP growth ignores fundamentals of sustainability and well-being
GDP growth ignores fundamentals of sustainability and well-being
Apart from GDP growth, other measures of well-being describe a bleak situation for different parts of the world. The climate crisis, permanent and high inequality, and growing levels of food insecurity and malnutrition continue to affect the quality of life of many societies.
“Policy makers should move beyond a narrow vision focused solely on fostering GDP growth; rather, they should aim to improve well-being in all parts of society. This requires prioritizing investment in sustainable development projects to foster education, renewable energy and a resilient infrastructure, ”says Elliott Harris, UN Under-Secretary-General for Economic Development and Chief Economist.
Economic growth accompanied by limited carbon emissions is possible with the change of the energy matrix
To combat climate change, it is necessary to respond to the world’s growing energy needs with renewable energy sources or with low levels of carbon emissions. This will require huge adjustments in the energy sector, which is currently responsible for three-quarters of global greenhouse emissions. If the per capita emissions of developing countries were equal to those of developed economies, global carbon emissions would increase by more than 250%, compared to the global goal of reaching net zero emissions by 2050.
The urgency of the energy transition continues to be underestimated, leading to short-sighted decisions such as increasing investment in oil and gas exploration and coal-fired power generation. This not only leaves many investors and governments exposed to sudden losses, but also poses considerable risks to environmental goals. Any delay in decisive measures promoting the energy transition could double future costs. The transition to a cleaner energy matrix will not only bring environmental and health benefits, but also economic opportunities for many countries.
A more balanced policy mix is needed
Issued by the United Nations Department of Global Communication Overconfidence in monetary policies is not only insufficient to revive growth, but also carries significant costs, including worsening risks to financial stability. Therefore, there is a need to adopt a more balanced policy mix that stimulates economic growth while advancing towards greater social inclusion, gender equality and environmentally sustainable production.