The United Nations responded to the rebound in the Chinese and US economies on Tuesday by revising its global economic forecast upward to 5.4% growth for 2021, but it warned that the surge in COVID-19 cases and insufficient availability of vaccines in many countries threaten a broad recovery base.
By increasing its projection from January of growth of 4.7%, the UN report on the state and outlook for the world economy in mid-2021 highlighted the rapid deployment of the vaccine in a few large economies led by the United States and China; and an increase in world trade in goods and manufactured products. commodities that have already reached their 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 of countries in South Asia, sub-Saharan Africa and Latin America and the Caribbean remain fragile. and uncertain “. Lead author Hamid Rashid, head of the Global Economic Monitoring Service of the UN Department of Economic and Social Affairs, told a press conference that “Europe’s prospects are not as bright as expected “due to signs of second and third waves of COVID-19 infections.
“The main challenge we face in the world right now is that infections continue to rise in many parts of the world, and we are seeing new variants and mutations affecting large populations in South Asia, also in Latin America, âhe said. “This poses a significant challenge in terms of recovery and global economic growth.” Rashid said: “Immunization is probably the number one problem right now in putting the world economy on the path to a steady recovery.” He noted, however, that “vaccine inequity is a serious challenge.”
In normal times, he said, 5.4% would be considered a very high economic growth rate, but this year it barely makes up for the losses of last year and the growth is “very uneven and also very uncertain “. He said the UN expects the very strong US economy to grow about 6.2% this year, “the fastest growing US economy since 1966” , and she expects the Chinese economy to grow by about 8.2%. 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 above the global average, but this year, the average growth rate of many developing countries and regions is lower due to the pandemic. One of the main drivers of the economic recovery has been investment, he said, with some countries like the United States only seeing a 1.7% decline in investment last year, while some developed countries have seen their investments fall by 4% of GDP, or even more.
The $ 16 trillion in stimulus measures to counter the economic impact of the coronavirus pandemic “were much needed to prevent a complete collapse of the global economy,” Rashid said, “but it did not lead to a massive increase in investments â. He warned that “massive spikes in stock prices globally” create “a risk to financial stability around the world, and we must be vigilant in the face of this risk as it could also derail recovery efforts at the future”.
Rashid said the UN’s forecast of 5.4 percent growth this year is much more cautious than other international organizations, including the International Monetary Fund, which last month revised its projections for 2021 to the increase to 6%. âWe are always optimistic about the global economy,â said Rashid, but there are a lot of uncertainties that we highlighted in our report, especially the spread of vaccination and coverage that is expected to occur over the course of the year. the next six months to achieve that kind of growth rate that we’re projecting here.
For 2022, the UN forecast that the global economy will grow by around 4.7% is higher than the IMF’s projection of 4.4%.