Economists Predict Slow Down in Global Growth

The latest report from UNDESA states that global growth is predicted to slow down from anywhere to 1.7-1.9%, a sharp drop from the 3% growth in 2022. Economists had previously predicted stronger economic growth in 2023. The impacts of the slowed growth will have widespread international impact.

Causes

Economic growth could be hampered by an unlimited number of factors. Economists have found that the drop likely stems from the war in Ukraine, lasting effects of the global pandemic caused by covid, inflation and even climate change. The expected drop is one of the sharpest in fifty years, and is expected to impact 75% of countries, including both developed and underdeveloped nations.

Possible Impacts

Economists believe that inflation will continue to rise, and while the world’s economy sits on a “razor’s edge” a global recession is possible. Other possible impacts of the downturn include “disproportionate losses” in women’s employment and even threats to “hard won achievements;” as well as hampering the elimination of poverty and food insecurity. Further, investment and consumption will slow as inflation and interest rates continue to rise.

Possible Solutions

While economists could see growth return in 2024, up to 2.7%, this is largely dependent on the consequences of choices made in 2023. UN secretary general, António Guterres, states that, “This is not the time for short-term thinking or knee-jerk fiscal austerity that exacerbates inequality, increases suffering and could put the SDGs (sustainable development goals) farther out of reach. These unprecedented times demand unprecedented action.” The report calls for international cooperation and more investment in people. Countries need to reprioritize their public spending policies, and invest in job creation, as well as social policy to ensure support for their citizens. Not only do countries need to solve problems at home, there needs to be collaboration amongst the global community. The director of the World Bank’s Prospects Group, Ayhan Kose, suggests that countries should focus first and foremost on peace in Europe, given the hostile climate of late, as well as climate change and food insecurity.

Article Written by Mikayla Barrett.

Sources:

The World Bank-Sharp Slowdown in Growth Could be Widespread, Increasing Risks to Global Economy | World Bank Expert Answers-January 10, 2023, available at https://www.worldbank.org/en/news/video/2023/01/10/global-economic-prospects-slowdown-growth-risks-economy-expert-answers#:~:text=Global%20growth%20is%20slowing%20sharply,the%20global%20economy%20into%20recession.

UN News-Global growth forecast to slow to 1.9% in 2023, warn UN economists-January 25, 2023, available at https://news.un.org/en/story/2023/01/1132822.