Mr. President of the General Assembly,
Excellencies
Distinguished Guests,
Ladies and Gentlemen,
It is my great pleasure to brief you today on the key findings of the World Economic Situation and Prospects 2022, the United Nations flagship report on the global economy, which was launched in mid-January.
The WESP 2022 carries five key messages:
First, while global output recovered in 2021, the world economy continues to be in a very fragile position amid new waves of COVID-19, sluggish jobs recoveries, lingering supply-side constraints, rising inflationary pressures and looming debt challenges.
Second, economic recoveries have remained highly uneven across regions and countries due to large differences in vaccine access and policy space. There is a risk that some developing countries will fall further behind.
Third, the pandemic has undermined and reversed some of the hard-won gains towards the 2030 Agenda for Sustainable Development. The number of people living in extreme poverty has increased sharply, gender gaps have widened, and income and wealth inequalities– both within and between countries – have risen.
Fourth, Governments around the world are facing difficult policy choices. To move from a rebound in output to a robust, inclusive and sustainable recovery, will require better targeted and coordinated monetary, fiscal, and labour market policies.
Fifth, the crisis has underscored the need for strengthening and reinvigorating multilateralism to ensure equal and universal access to vaccines, to address debt challenges, unlock new financing for sustainable development, and transition more rapidly towards low-carbon economies.
Let me now provide more details on each of these findings.
The global economy is estimated to have grown by 5.5 per cent in 2021. This is the highest rate of growth in nearly four decades. However, global economic prospects slowed as the Omicron wave triggered new disruptions, while major central banks are withdrawing monetary stimulus in response to rapidly rising inflation. The United Nations therefore expects the world economy to grow by 4 per cent in 2022 and 3.5 per cent in 2023.
Worryingly, recovery from the pandemic has been highly unequal. Output losses, relative to pre-pandemic projections will remain substantial in many developing countries.
Instead, for Least Developed Countries economic growth in 2021 was lower than other developing countries, but it is expected to grow by 4.0 percent in 2022 and 5.7 percent in 2023.
Finally, we expect the economic situation to be precarious for many of the small island developing States (SIDS), which are highly tourism dependent.
Most worryingly, the pandemic has caused lasting setbacks to sustainable development, disproportionately affecting the poor and vulnerable groups.
Gender gaps in employment remain higher than before the pandemic, with many women facing strong barriers to re-entering the labour force.
Weak economic growth and slow labour market recovery are expected to keep poverty rates above pre-pandemic levels in the near term.
Let me now turn to the policy area.
The thematic chapter of the WESP 2022 takes an in-depth look at the global monetary policy response to the crisis. Quantitative easing has delivered some positive results to restore market confidence and stabilize financial markets.
However, these programmes were not very effective in boosting longer-term growth, and pushed up asset prices, which exacerbated already massive wealth inequalities.
We have already entered a phase where the macroeconomic and financial policy landscape is shifting. Some suggestions include the following.
To avoid disorderly adjustments monetary and fiscal authorities need to carefully sequence, calibrate and coordinate their policies. An abrupt tightening of monetary conditions must be avoided, as it would increase debt servicing costs and raise financial stability concerns, especially for developing countries with open capital accounts and high levels of external debt.
To conclude, while the world has rebounded from the worst of the pandemic, the recovery is incomplete, uneven and uncertain. The new headwinds, including the rapid spread of variants and the upcoming global monetary tightening cycle show that the path to a robust, inclusive and sustainable recovery remains challenging. Stronger and more effective international cooperation is critical to overcome these challenges, and to establish resilience for the future.
I thank you for your attention.