UN raises global economic forecast to 5.4% growth in 2021

CAMEROON – The United Nations reacted to the rebound in the Chinese and American economies on Tuesday by revising its global economic forecast upwards to 5.4% growth for 2021, but warned that the surge in COVID-19 cases and insufficient availability of vaccines in many countries threaten a broad base recovery.

Raising its growth projection to 4.7% from January, the UN’s Mid-2021 World Economic Situation and Prospects report highlighted the rapid deployment of vaccines in a few major led economies. by the United States and China and an increase in world trade in goods and manufactured goods. which has already reached its pre-pandemic level.

But the UN has warned that “this is unlikely to be enough to lift the rest of the world’s economies” and that “the economic prospects for countries in South Asia, sub-Saharan Africa, Latin America and the Caribbean remain fragile and uncertain”.

Lead author Hamid Rashid, head of the Global Economic Monitoring Service at the UN Department of Economic and Social Affairs, told a press conference that “Europe’s prospects are not as brighter than expected” due to signs of second and third waves of COVID-19 infections.

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“The main challenge we are facing in the world right now is that infections continue to increase in many parts of the world, and we are seeing new variants and new mutations affecting large populations in South Asia, also in Latin America,” he said. “This poses a significant challenge in terms of global economic recovery and growth.”

Rashid said, “Vaccination is probably the number one issue right now to put the global economy on the path to a steady recovery.” He noted, however, that “vaccine inequality is a serious challenge.”

Normally, he said, 5.4% would be considered a very high rate of economic growth, but this year it barely makes up for last year’s losses and growth is “very uneven and also very uncertain”.

He said the UN expects the very strong US economy to grow around 6.2% this year, “the fastest growing US economy since 1966”. , and it expects the Chinese economy to grow by around 8.2%.

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But he called India, Brazil, South Africa and many other developing countries “weak spots”.

Rashid said that in the past, the growth rate of developing countries was higher than the global average, but this year the average growth rate of many developing countries and regions is lower due to the pandemic.

A key driver of the economic recovery has been investment, he said, with some countries like the United States seeing only a 1.7% decline in investment last year, while some developed countries have seen investment fall by 4% of GDP or more.

The $16 trillion in stimulus to counter the economic impact of the coronavirus pandemic “was much needed to avoid a complete collapse of the global economy,” Rashid said, “but it hasn’t led to a massive increase in investments”.

He warned that ‘massive stock price spikes around the world’ create ‘something of a risk to financial stability around the world, and we need to be vigilant of that risk as it could also derail stimulus efforts. in the future”.

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Rashid said the UN’s growth forecast of 5.4% this year is much more cautious than other international organisations, including the International Monetary Fund, which last month revised its projection for 2021 upwards. at 6%.

“We are still optimistic about the global economy,” Rashid said, but “there are many uncertainties that we have highlighted in our report, particularly the spread of vaccination and coverage that needs to happen over the course of the year. of the next six months to achieve that kind of growth rate that we’re projecting here.

For 2022, the UN forecast for the global economy to grow by around 4.7% is higher than the IMF projection of 4.4%.

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