The United Nations Conference on Trade and Development (UNCTAD) forecasts global economic growth of 5.3% this year, “the highest in nearly half a century”, according to a report released on Wednesday.
“World growth is expected to reach 5.3% this year, the highest in nearly half a century, with some countries restoring (or even surpassing) their 2019 production level by the end of 2021”, reads the Report of Trade and Development 2021 known this Wednesday.
The United Nations agency warns that “the global perspective beyond 2021, however, remains under uncertainty.”
“Next year will see a slowdown in global growth, but for how long and how much will depend on policy decisions, particularly in the main economies,” the body says.
For 2022, the UN institution expects economic growth of 3.6%, leaving world incomes below their anticipated trend before the pandemic.
In comparison, the International Monetary Fund (IMF) forecasts world growth of 6.0% this year and 4.9% next.
UNCTAD even warns that “even assuming there are no subsequent shocks, a return to the pre-pandemic earnings trend could, under reasonable assumptions, take until 2030.”
“This is a worrying prospect for many countries. The damage from the Covid-19 crisis has exceeded that of the global global crisis in many parts of the world economy, but it has been particularly draining in the developing world,” the document says.
As for trade in goods and services, which declined by 5.6% in 2020, it is expected to increase by 9.5% in 2021.
“Despite this, the recovery has been extremely unbalanced, and the scars will continue to weigh on the provision of trade in the coming years”, says the UN body.
UNCTAD believes that “overcoming the barriers to greater prosperity will depend on improving coordination of policy choices made in major economies in the coming years as they try to maintain the momentum for recovery and build resilience in the face of future shocks”.
The UN body also considers that “the reluctance of other advanced economies to follow the example of the United States in releasing vaccine patents is a worrying and costly sign”, since delays in vaccination will cost 2.3 billion dollars. ,9 billion euros) by 2025, according to recent estimates, which will mainly be reflected in developing countries.
However, despite calling for coordination of major economies, UNCTAD recognizes that this “will not be enough”, and that “renewed international support” is needed for developing countries, which in many cases face “a severe health crisis” due to the pandemic.
“This effort should also lead us to rethink – or, perhaps, to revive – the role that fiscal policy can play, in addition to recent countercyclical interventions”, can be read in the document.
UNCTAD recalls that despite a decade in which there were massive monetary injections from the main central banks, the inflation targets remained unfulfilled, and still “there is no sign of a sustained increase in prices”.
Despite this, “UNCTAD believes that rising food prices could pose a serious threat to vulnerable populations in the south, already financially affected by the health crisis.”
UNCTAD also calls for “concerted debt relief and in some cases direct cancellation, in order to reduce indebtedness in developing countries and avoid a new lost decade for development”.