The global economy will continue to grow at a steady pace of around 3 percent in 2019 and 2020 amid signs that global growth has peaked. However, a worrisome combination of development challenges could further undermine growth, according to the United Nations World Economic Situation and Prospects (WESP) 2019.
“While global economic indicators remain largely favorable, they do not tell the whole story. The World Economic Situation and Prospects 2019 underscores that behind these numbers, one can discern a build-up in short-term risks that are threatening global growth prospects. More fundamentally, the report raises concerns over the sustainability of global economic growth in the face of rising financial, social and environmental challenges.” —António Guterres, UN Secretary-General.
Global growth is expected to remain steady at 3.0 percent in 2019 and 2020, after an expansion of 3.1 percent in 2018. Growth in the United States is projected to decelerate to 2.5 percent in 2019 and 2 percent in 2020, as the impulse from fiscal stimulus in 2018 wanes. A steady growth of 2.0 percent is projected for the European Union, although risks are tilted to the downside, including a potential fallout from Brexit.
Growth in China is expected to moderate from 6.6 percent in 2018 to 6.3 percent in 2019, with policy support partly offsetting the negative impact of trade tensions. Several large commodity-exporting countries, such as Brazil, Nigeria, and the Russian Federation, are projected to see a moderate pickup in growth in 2019–2020, albeit from a low base.
However, economic growth is uneven and is often failing to reach where it is most needed. Per capita incomes will stagnate or grow only marginally in 2019 in several parts of Africa, Western Asia, and Latin America and the Caribbean. Even where per capita growth is strong, economic activity is often driven by core industrial and urban regions, leaving peripheral and rural areas behind. Eradicating poverty by 2030 will require both double-digit growth in Africa and steep reductions in income inequality.
Strengthening global cooperation is central to advancing sustainable development
The report underscores that strengthening global cooperation is central to advancing sustainable development. The multilateral approach to global policymaking is facing significant challenges, including a trend toward greater unilateral actions. Pressures have materialized in the areas of international trade, international development finance and tackling climate change. These threats come at a time when international cooperation and governance are more important than ever—many of the challenges laid out in the 2030 Agenda for Sustainable Development are global by nature and require collective and cooperative action. Waning support for multilateralism also raises questions around the capacity for collaborative policy action in the event of a widespread global shock.
Global trade tensions pose a threat to the economic outlook
Amid the rise in global trade tensions, global trade growth moderated over the course of 2018, from the growth of 5.3 percent in 2017 to 3.8 percent. While tensions have materially impacted some specific sectors, stimulus measures and direct subsidies have so far offset much of the direct economic impacts on China and the United States. But a prolonged escalation of trade tensions could severely disrupt the global economy.
Climate risks still not fully integrated into economic decision-making
A fundamental shift in the way the world powers economic growth is imperative. Economic decision-making must fully integrate the negative climate risks associated with emissions. This can be achieved through tools such as carbon pricing measures, energy efficiency regulations such as minimum performance standards and building codes, and reduction of socially inefficient fossil fuel subsidy regimes. Governments can also promote policies to stimulate new energy-saving technologies, such as research and development subsidies.
In countries that remain highly reliant on fossil fuel production, economic diversification is vital.
Read and download the report: World Economic Situation and Prospects 2019
Original source: United Nations
Published on 21 January 2019
