Green infrastructure development is key to boosting recovery along the BRI
The key UN report on the world economy, released on Thursday, shows that the rapid spread of the Omicron variant COVID-19 has held back a rapid recovery, thwarting signs of solid growth at the end of last year.
the Situation and outlook for the world economy in 2022 (WESP), produced by the United Nations Department of Economic and Social Affairs (DESA), cites a cocktail of problems that are slowing the economy, namely new waves of COVID-19[female[feminine infections, lingering labor market and supply chain challenges, and growing inflationary pressures.
The slowdown is expected to continue next year. After an encouraging 5.5% expansion in 2021 – driven by strong consumer spending and some recovery in investment, with trade in goods exceeding pre-pandemic levels – global output is expected to rise by just 4.0 % in 2022 and 3.5% in 2023.
“Bridging the inequality gap”
Commenting on the launch of the report, António Guterres, the UN Secretary-General, said that, with WESP calling for more targeted and coordinated policy and financial measures, it is time to close the inequality gaps within and between countries. them. “If we work in solidarity – as one human family – we can make 2022 a true year of recovery for people and economies,” he said.
Liu Zhenmin, Under-Secretary-General of the United Nations Department of Economic and Social Affairs, drew attention to the importance of a coordinated and sustained global approach to containing COVID-19 that includes universal access to vaccines, and warned that without this, “the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the global economy”.
The report predicts that developing countries will be hit harder in the long term than wealthier nations. Africa, Latin America and the Caribbean are expected to experience significantly lower growth than pre-pandemic projections, leading to more poverty and less progress on sustainable development and climate action.
The number of people living in extreme poverty is expected to remain well above pre-pandemic levels, with poverty expected to increase further in the most vulnerable economies: in Africa, the absolute number of people living in poverty is expected to increase until 2023. In contrast, the economies of richer countries are expected to recover almost completely by next year.
The special financial measures put in place by many governments since the pandemic – such as bailouts, improved social protection and job support – should, according to the report, remain in place to ensure a strong recovery.
However, in light of rising inflation, several central banks have begun to reverse their extraordinary monetary response to the crisis.
Many low-income developing countries face an unsustainable external debt burden, amid sharply rising interest rates.
Additional borrowing during the pandemic and rising debt service costs have put many on the brink of a debt crisis. These countries urgently need additional and coordinated international support for debt relief, the report notes.
Jobs, slow to reappear
Employment levels are expected to remain well below pre-pandemic levels for the next two years, and possibly beyond. Labor force participation in the United States and Europe remains at historic lows, as many of those who lost their jobs or left the workforce during the pandemic have yet to return.
These shortages in developed economies come on top of other pressures, such as inflation and supply chain challenges.
At the same time, job growth in developing countries remains weak, amid slower progress on immunization and limited stimulus spending. Africa, Latin America and the Caribbean, and Western Asia are expected to see a slow recovery in employment. In many countries, the pace of job creation is not sufficient to compensate for past job losses.
The WESP was released two days after the last World Bank Global Economic Outlook report, which reached similar conclusions, predicting that, given the rapid spread of the Omicron variant, the COVID-19 pandemic will continue to disrupt economic activity in the near term.