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UN forecasts Global Economic Growth of 4.7% in 2021

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Globe Live Media, Monday, January 25, 2021

The United Nations warned on Monday that the global economy is “at a tipping point,” still affected by the COVID-19 pandemic, the effect of which will be felt for years, although the organization expects some recovery with a 4.7% growth in 2021, which would barely offset the losses in 2020.

The new United Nations report on the World Economic Situation and Outlook noted that the historical crisis unleashed by the global impact of the coronavirus caused the economy to shrink 4.3% in 2020, the sharpest contraction in global production since the Great Depression that began in 1929, and much higher than the 1.7% reduction in the Great Recession of 2009.

“The depth and severity of the unprecedented crisis portends a slow and painful recovery,” said United Nations chief economist Elliott Harris, assistant secretary-general for economic development. “As we enter a long recovery phase with the deployment of COVID-19 vaccines, we must begin to drive long-term investments that chart a course towards a more resilient recovery, accompanied by a fiscal strategy that avoids premature austerity. ”.

 

The lockdowns, quarantines and social distancing measures introduced in the second quarter of 2020 “helped save lives, but also disrupted the livelihoods of hundreds of millions of people around the world,” the report said.

By April, the document noted, “the total or partial confinement measures had affected nearly 2.7 billion workers, representing 81% of the global workforce.” Another 131 million people, many of them women, children and people from marginalized communities, were pushed into poverty.

China, the second largest economy in the world and where COVID-19 first appeared, was the only country in the world to register positive economic growth in 2020, 2.4%. The UN estimates were that it would grow 7.2% in 2021.

 

Hamid Rashid, director of the UN Global Economic Monitoring Branch and lead author of the report, explained at a press conference that China will account for around 30% of global growth in 2021. If that happens, he said, it will help to many countries in Africa, Latin America and the Caribbean, supplying resources and raw materials to China.

According to United Nations forecasts, the US economy will grow 3.4% in 2021 after shrinking 3.9% in 2020. The Japanese economy will grow 3% this year after contracting 5.4% last year, and the Eurozone economies will grow 5% after shrinking 7.4% in 2020.

 

Developing countries suffered a milder contraction of 2.5% last year, and the UN expected them to have a 5.7% recovery in 2021.

The big winners were the stock markets, Rashid noted.

 

Japan’s Nikkei 225 Index grew by around 45% between March and December, while the Dow Jones and the S&P 500 rose more than 30%, compared to average growths below 10% in the previous five years.

“And that is alarming because it shows the disconnect between real economic activities and financial sector activities,” he said.

Ben Oakley
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