UN raises its global growth forecast for this year to 2.3%.
The UN on Tuesday revised upward its forecasts for the world economy and now expects a 2.3% growth for this year thanks to better prospects in the United States, Europe and China.
The organization improved by four tenths its estimate compared to the one it had published in January, but worsened by two tenths its forecast for 2024, when it expects the world to grow by 2.5%.
The United Nations, in a report, attributed the 2023 revision mainly to the resilience of U.S. household spending.The European Union (EU) has seen improvements in consumption and lower gas prices, and China’s growth has been boosted by the lifting of restrictions imposed by covid-19.
As a positive element, the organization highlights above all the strength demonstrated by the labor market in the developed economies, with high employment rates in the United States and Europe and wage improvements in many places.
Meanwhile, he points out that precisely this situation is complicating the. work of central banks to control inflation, which remains very high in many countries, and warns that more cooperation is needed to ensure that the sharp monetary tightening being seen does not sink the economies of developing countries.
Improvements and risks in the U.S.
UN expects U.S. economy to to grow by 1.1% this year (7 tenths of a percentage point more than it forecast in January), but it also warns that in recent months it has become evident “significant fragilities”for example with the recent banking crisis and the difficulties in controlling inflation.
By the end of 2023 and early 2024 the United Nations expects a contraction as a result of foreseeable corrections in the housing market and in credit demand, which should curb spending and investment. In 2024, he expects U.S. Gross Domestic Product (GDP) to grow by 1%, seven tenths of a percentage point less than before.
A more resilient Europe than expected
In the case of Europe, the report notes that its economies “have proven to be. more resilient than expected previously” and, as a result, improves the growth forecast for this year by 7 tenths of a percentage point to 0.9%.
“Although high energy prices, persistent inflation and aggressive monetary tightening have weighed heavily on economic growth, the majority of countries have so far escaped a recession and the near-term outlook has improved,” says the document, which does not provide data broken down by country. By 2024, the UN lowered its forecast by one tenth of a percentage point. of growth in the EU, to 1.5 %.
In the case of the United Kingdom, the UN is still waiting for a economic contraction for this year, but less than expected, only 0.1%, and a rebound of 1.1% next year.
One of the biggest changes from the report that the United Nations had presented in January is with Russiawhereas at that time it expected a drop of 2.9%, it now expects a drop of only 0.6%.
For its part, China’s economy, one of the great engines of world growth, will grow by 5.3% this year (up 5 tenths) and by 4.5% next year (unchanged) thanks to the recovery in consumption and investment following the end of many of the emergency measures put in place during the pandemic.
No change in Latin America
In Latin America and the Caribbean, the UN maintains its forecast of 1.4% growth this year and revises by one tenth of a percent, to 2.4%, that of 2024, considering that the slowdown it warned of in January, which particularly affects Argentina, Chile, Brazil and Colombia, has been confirmed.
Despite the fact that 2023 will be less black than the United Nations initially expected, the organization stresses that the world is facing the perspective of a prolonged period of low growth due to the effects of the pandemic, the growing impact of climate change and macroeconomic problems that remain unresolved.
This poses problems especially for regions such as Africa and Latin America, where it seems to be confirmed a long-term stagnation and where economies are not being able to facilitate the investments deemed necessary for the future.