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World Economic Situation and Prospects 2023: Global annual output growth to drop to 1.9 per cent in 2023.
Key Takeaway
- According to a new UN report, growth in India is expected to remain strong at 5.8 per cent, although lower than 6.4 per cent in 2022.
- According to the United Nations’ World Economic Situation and Prospects 2023, the reasons are the food and energy problems that will strike the world economy hard in 2022, against the backdrop of COVID-19 and the Ukraine war.
World Economic Situation and Prospects 2023 Report findings
- Lowest Growth Rates
- Global output growth is expected to slow from an estimated 3.0 per cent in 2022 to 1.9 per cent in 2023, representing one of the slowest rates in recent decades.
- Reasons:
- Series of severe and mutually reinforcing shocks.
- The COVID-19 pandemic
- The war in Ukraine and the resulting food and energy crises
- Surging inflation
- Debt tightening
- The climate emergency.
- Recession
- Firstly, the current downturn has hindered economic recovery from the Covid-19 issue, threatening numerous countries with the recession in 2023.
- Additionally, disproportionate losses in women’s employment during the pandemic’s initial phase have yet to be entirely recovered.
- Slight Growth in Global Output
- Firstly, the world’s output growth can bounce back to 2.7 % in 2024, subject to a change in the war situation and the disruption of supply chains.
- Secondly, China is expected to increase at a rate of 4.8% in 2023 and 4.5% in 2024.
- Furthermore, the United States is expected to expand by 0.4% this year and 1.7% in 2024.
- Russian Export
- Russian exports grew in 2022 due to growing commerce with China, India, and Turkey.
- Outlook of South Asia
- South Asia’s economic outlook has deteriorated dramatically due to high food and energy costs, monetary tightening, and fiscal weaknesses.
- In addition, the average GDP growth rate is expected to slow from 5.6% in 2022 to 4.8% in 2023.
- Prospects are difficult for economies such as Bangladesh, Pakistan, and Sri Lanka, which have asked the International Monetary Fund (IMF) for financial help in 2022.
From the Indian Perspective
- Growth Rate
- India’s growth rate is forecast to remain robust at 5.8%, slightly lower than the 6.4% predicted for 2022.
- Subsequently, higher interest rates and a worldwide slump are putting a damper on investment and exports.
- Subsidies for food and energy in India kept the economy from collapsing.
- Furthermore, India will be the world’s fastest-growing major economy in 2024, rising at a 6.7% annual rate.
- Unemployment
- Firstly, the unemployment rate in 2022 will have fallen to pre-pandemic levels due to increased urban and rural employment, reflecting strong domestic demand.
- However, youth employment remained below pre-pandemic levels, particularly among young women.
- Inflation
- In 2022, annual inflation was expected to be 7.1%.
- In India, inflation is predicted to fall to 5.5% in 2023 as global commodity prices stabilise and currency depreciation slows, reducing imported inflation.
Recommendations of the Report
- Governments should avoid fiscal restraint.
- Fiscal austerity refers to economic policies that include budget cuts and tax hikes.
- In addition, governments utilise it to reduce fund allocation deficits.
- Governments should adjust their public spending policies in response to the changing global economy.
- Social protection mechanisms should be enhanced.
- Temporary subsidies will be offered.
- Utility bill discounts.
- Finally, report advice: Invest in digital infrastructure, climate change, and new technology.
Pic Courtesy: Economic Times
Content Source: Down to Earth