GENEVA — The global economy slowed to a 2.3 percent growth rate last year, its lowest of the decade, due to rising trade tensions and slowing investment, the U.N. Conference on Trade and Development reported on Thursday.
UNCTAD’s flagship report on expected trends in the global economy said that was the slowest rate of expansion since the global financial crisis of a decade ago. Only a modest acceleration in global growth of 2.5 percent is “possible” this year, it said, but that rate is forecast to rise to 2.7 percent in 2021.
That would still be less than the 3 percent growth rate in 2018 and the 3.2 percent growth rate in 2017.
But the United Nations agency’s report cautioned that continuing trade and geopolitical tensions around the world could darken the picture further, bringing on a global growth rate of just 1.8 percent in 2020.
The 236-page report is a warning that “economic risks remain strong, aggravated by deepening political polarization and increasing skepticism about the benefits of multilateralism,” U.N. Secretary-General António Guterres said in a statement introducing the report.
“These risks could inflict severe and long-lasting damage on development prospects,” he said. “They also threaten to encourage a further rise in inward-looking policies, at a point when global cooperation is paramount.”
⚠️ Global economic growth hits 10-year low in 2019
📉 Just 2.3% growth in 2019
📈 A modest uptick expected in 2020 & 2021
💸 Weaker trade & investment mostly to blameRead @UNDESA’s full #WorldEconomyReport here: https://t.co/XopxOrxfzA pic.twitter.com/ymgNqrk9vh
— UN DESA (@UNDESA) January 16, 2020
U.S. slowing, East Asia fastest growing
As the world’s biggest economy, the United States’ GDP growth, which notched 2.9 percent in 2018 but slowed to 2.2 percent in 2019, is forecast to lag still further to 1.7 percent in 2020, the report said, reflecting “persistent policy uncertainty, weak business confidence and waning fiscal stimulus.”
Meantime, the European Union, which had a 2 percent growth rate in 2018, dropped to 1.4 percent GDP growth in 2019, but is expected to rebound slightly to 1.6 percent in 2020.
East Asia, with a 5.2 percent GDP growth rate, and East Africa, with a 6 percent growth rate, were the fastest growing regions in 2019. East Asia’s rate is expected to remain flat this year and next, while East Africa’s also is expected to remain the same this year but rise to 6.2 percent in 2021.
China’s 6.1 percent GDP growth rate in 2019 is projected to slow slightly to 6 percent in 2020 and to 5.9 percent in 2021. However, other big emerging economies, such as Brazil, India, Mexico, Russia and Turkey, are forecast to gradually pick up steam over the next two years.
Africa has experienced “a decade of near-stagnation in per capita GDP,” the report said. And in a third of commodity-dependent developing countries that are home to 870 million people, it said, average real incomes have dropped to below what they were in 2014. That includes nations such as Angola, Argentina, Brazil, Nigeria, Saudi Arabia and South Africa.
“At the same time, the number of people living in extreme poverty has risen in several sub-Saharan African countries and in parts of Latin America and Western Asia,” UNCTAD said. “Sustained progress towards poverty reduction will require both a significant boost to productivity growth and firm commitments to tackle high levels of inequality.”
To eliminate poverty around much of Africa, UNCTAD estimates, annual per capita growth of more than 8 percent is needed, which would be a huge leap from the 0.5 percent average rate over the past decade.
Elliott Harris, a U.N. assistant secretary-general for economic development, recommended that policy makers “move beyond a narrow focus on merely promoting GDP growth” and instead make more of an effort to enhance “well-being” throughout society.
“This requires prioritizing investment in sustainable development projects to promote education, renewable energy, and resilient infrastructure,” he said. “Much greater attention needs to be paid to the distributional and environmental implications of policy measures.”
