United Nations raises global economic growth forecast to 5.4% in 2021
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 vaccines in a few large economies led by the United States and China and an increase in world trade in goods and manufactured products. which has already reached its pre-pandemic level.
But the UN has warned that “this is unlikely to be enough to stimulate 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 Branch of the United Nations 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, ”he 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 a steady path to recovery.” He noted, however, that “the inequity of vaccines 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 US economy, which is very strong, to grow by about 6.2% this year, “the fastest growing US economy since 1966,” and that it expects the Chinese economy to grow by around 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 would be 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% drop in investment last year. , while some developed countries have seen their investments fall by 4% of GDP or more.
The $ 16 trillion stimulus to counter the economic impact of the coronavirus pandemic “was essential to prevent a complete collapse of the global economy,” Rashid said, “but it did not lead to a massive increase in investments “.
He warned that “massive surges in stock prices around the world” create “something of a risk to financial stability around the world, and we need to be vigilant about that risk as it could also derail recovery efforts in the world. come”.
Rashid said the UN’s forecast of 5.4 percent growth this year is much more cautious than those of other international organizations, including the International Monetary Fund, which last month revised its growth upwards. projection for 2021 at 6%.
“We are still optimistic about the global economy,” said Rashid, but “there are a lot of uncertainties that we have highlighted in our report, especially the spread of vaccination and coverage that needs to occur in 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 projection of 4.4%.