Despite growth in US, EU, and China, UN predicts bleak outlook for strong global economic recovery

The United Nations recently released its mid-2023 report, which provided insight into economic forecasts for this year. While economic growth is expected to improve slightly in the United States, European Union, and China, the outlook for a strong global economic recovery in 2023 remains bleak, and inflation continues to remain high. Uncertainty and low growth prospects will disrupt the world economy, according to the report.

The UN Department of Economic and Social Affairs highlighted that tighter credit conditions and rising external funding costs in many developing countries are weakening growth prospects. Despite beating the UN forecast of 1.9% in January, the global economy is now projected to grow by 2.3%. However, this growth is well below the past 20-year average of about 3.1%, which is a concerning outlook for the global economy.

The UN report also noted that global inflation is projected to fall to 5.2% this year from 7.5% last year. In the United States, household spending has contributed to an increase in inflation this year. The UN raised its inflation forecast from 0.4% to 1.1% in January. Similarly, lower gasoline prices and strong consumer spending pushed the European Union’s growth forecast to 0.9% this year, up from 0.2% in January. China’s economic growth is also expected to rise from 4.8% to 5.3% in 2023 due to the lifting of COVID-19 restrictions.

Despite these changes, per capita income growth remains very low in many developing regions. Before the pandemic, per capita growth was just 1.2% in Latin America and the Caribbean, 1.8% in West Asia, and 1.9% in Africa. The UN’s head of economic analysis and policy division, Shantanu Mukherjee, emphasized that this is a “real cause for concern” for the areas where the poorest live. Evidence shows that women and children are already being adversely affected by increasing risks of poverty and hunger coupled with rising inflation in many developing countries.

Overall, the UN’s mid-2023 report highlights the concerning outlook for the global economy. While some economic growth is to be expected in certain countries, the low growth projections and continued structural problems at low growth levels will limit progress in reducing poverty and addressing socio-economic inequalities in many developing regions.

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