THE WORLD IS STILL SEARCHING FOR THE FASTEST WAY TO ECONOMIC RECOVERY AND GROWTH.
After two years of the COVID-19 pandemic, poverty is increasing, inequalities are widening, and daily life is becoming a growing struggle across every society – especially for those already on the social and economic margins. In Africa and Asia regions where we have a majority of workers in the informal economy and several hundred millions of children in low-income households these category of people have been hit hard by the pandemic’s sweeping economic impacts. Immediately after the pandemic, hundreds of millions of people were pushed into extreme poverty. Economic recovery, along with the core promise of the Sustainable Development Goals to “leave no one behind,” are fast slipping beyond reach. As the countries of Africa and Asia look to recovery prospects, they face fiscal constraints and difficult budgetary decisions.
Our survey of the search for Economic recovery in some countries in Africa and Asia is of a strong opinion that now is the time for more investment and spending, not less. Spurring sustainable recovery and development while countering rising inequalities across the regions demands increased and inclusive spending to support human development. This includes strengthening health care, education, food systems and universal social protection. It also includes bold investments in job creation, the green transition, gender equality and opportunities for youth.
A series of severe and mutually reinforcing shocks — the COVID-19 pandemic, the war in Ukraine and resulting food and energy crises, surging inflation, debt tightening, as well as the climate emergency are the immediate issues confronting our world. Against this backdrop, world output growth is projected to decelerate from an estimated 3.0 per cent in 2022 to 1.9 per cent in 2023, marking one of the lowest growth rates in recent decades, according to the United Nations World Economic Situation and Prospects (WESP) 2023.
Global growth is forecast to moderately pick up to 2.7 per cent in 2024 as some of the headwinds will begin to subside. However, this is highly dependent on the pace and sequence of further monetary tightening, the course and consequences of the war in Ukraine, and the possibility of further supply-chain disruptions.
The tepid global economic prospects also threaten the achievement of the 17 Sustainable Development Goals (SDGs), when the 2023 SDG Summit in September marks the mid-point of the implementation of the 2030 Agenda.
“This is not the time for short-term thinking or knee-jerk fiscal austerity that exacerbates inequality, increases suffering and could put the SDGs farther out of reach. These unprecedented times demand unprecedented action,” said António Guterres, United Nations Secretary-General. “This action includes a transformative SDG stimulus package, generated through the collective and concerted efforts of all stakeholders,” he added.
Amid high inflation, aggressive monetary tightening and heightened uncertainties, the current downturn has slowed the pace of economic recovery from the COVID-19 crisis, threatening several countries — both developed and developing. Growth momentum significantly weakened in the United States, the European Union and other developed economies in 2022 and 2023, adversely impacting the rest of the global economy through a number of channels.
Tightening global financial conditions coupled with a strong dollar exacerbated fiscal and debt vulnerabilities in developing countries. Over 85 per cent of central banks worldwide tightened monetary policy and raised interest rates in quick succession since late 2021, to tame inflationary pressures and avoid a recession.