The global economic recovery faces major obstacles amid new waves of COVID-19 mutations. After expanding by 5.5 percent in 2021, global output is projected to grow by only 4 percent in 2022 and 3.5 percent in 2023, according to the United Nations' World Economic Situation and Prospects (WESP) 2022 report released on Thursday.
The strong recovery in 2021, driven by strong consumer spending and some investment absorption, with trade surpassing pre-pandemic levels, saw the strongest growth, a rate that exceeded that of the previous four decades, the report highlights.
However, the momentum for growth, especially in China, the United States and the European Union, slowed significantly by the end of 2021 as the effects of monetary and fiscal stimulus began to fade and major supply chain disruptions emerged. Rising inflationary pressures in many economies pose additional risks.
"In this fragile and uneven period of global recovery, the Global Economic Situation and Prospects 2022 calls for better targeted and coordinated policy and financial measures at the national and international levels," said Secretary-General Antonio Guterres, adding that "now is the time to close the gaps in inequalities within and across countries. If we work in solidarity, as a family, we can make 2022 a true year of recovery for people and equally for economies."
With the highly contagious Omicron variant of COVID-19 unleashing new waves of infections, the human and economic toll of the pandemic is predicted to rise again.
Without a coordinated and sustained global approach to contain COVID-19 that includes universal access to vaccines, the pandemic will continue to pose the greatest risk to an inclusive, sustainable recovery of the global economy," noted UN Under-Secretary-General for Economic and Social Affairs Liu Zhenmin.
Labor market recovery is lagging and global poverty levels will remain high. Employment levels are expected to remain well below pre-pandemic levels over the next two years, and possibly beyond.
[/P][BR][BR]Employment in the United States and Europe remains stable at historically low levels. Labor shortages in developed economies are exacerbating supply chain challenges and inflation.
Africa, Latin America, the Caribbean and West Asia are expected to see slow job recovery. In Africa, the number of people living in poverty is projected to rise by 2023. Moreover, there is uneven recovery in employment and income across different population groups. Employment among women, particularly in developing countries, experienced a larger decline as a result of the pandemic, the report said.
Central banks around the world have begun to ease their extraordinary monetary response amid rising inflationary pressures.
The fiscal situation unsustainable external debt and additional borrowing during the pandemic and rising debt servicing costs has brought many of the countries' economies to the brink of default. Coordinated international support for debt relief is urgently needed, the report noted.
"Monetary authorities in developed countries should accelerate and pursue asset purchases and reduce their balance sheets to maintain financial stability, keep public debt servicing costs low, ensure debt sustainability, and avoid premature fiscal consolidation," said Hamid Rashid, Head of the Global Economic Monitoring Branch and lead author of the report.
Source: Cyprus Times
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