That Global economic situation and outlook for 2022 (WESP), prepared by the United Nations Department of Economic and Social Affairs (DESA), mentions a cocktail of problems slowing the economy, namely new waves of COVID-19 infections, persistent problems in the labor market and supply chains, and rising inflationary pressures.
The decline is expected to continue next year. After an encouraging growth of 5.5% in 2021, driven by strong consumer spending and some growth in investment, with merchandise trade above pre-pandemic levels, global output is projected to grow by just 4.0% in 2022 and 3 .5% in 2022. 2023.
“Narrow the gap in inequality”
Commenting on the presentation of the report, UN Secretary-General António Guterres said that as WESP calls for more focused and coordinated political and financial action, the time has come to close the gaps in inequalities within and between countries. “If we work in solidarity – as one human family – we can make 2022 a true year of recovery for both the people and the economy,” he said.
Liu Zhenmin, Under-Secretary-General of the United Nations for Economic and Social Affairs, drew attention to the importance of a coordinated, sustainable global approach to containing COVID-19, which includes universal access to vaccines, and warned that without it, “The pandemic will continue to represent greatest risk to an inclusive and sustainable global economic recovery.”
The report predicts that developing countries will suffer more in the long run than richer countries. Africa and Latin America and the Caribbean are projected to experience significantly lower growth than pre-pandemic projections, leading to more poverty and less progress on sustainable development and climate change.
The number of people living in extreme poverty is projected to remain well above pre-pandemic levels, while poverty is projected to rise further in the most vulnerable countries: in Africa, the absolute number of people living in poverty is projected to increase until 2023. On the contrary, the wealthier countries are expected to recover almost completely by next year.
Special financial measures introduced by many governments in the wake of the pandemic, such as financial assistance, improved social protection and employment support, must remain in place to ensure a strong recovery, the report says.
However, in light of rising inflation, several central banks have begun to wind down their extraordinary monetary response to the crisis.
Many low-income developing countries are facing an unsustainable burden of external debt as interest rates soar.
Additional borrowing during the pandemic and increased debt servicing costs have brought many of them to the brink of a debt crisis. These countries urgently need further and coordinated international support for debt relief, the report notes.
© ILO/Feri Lateef
Jobs are slowly reappearing
Employment is projected to remain well below pre-pandemic levels for the next two years, and possibly longer. Labor force participation in the US and Europe remains at historically low levels as many who lost their jobs or left the labor market during the pandemic have yet to return.
This shortage in developed countries exacerbates other problems such as inflation and supply chain problems.
At the same time, employment growth in developing countries remains weak amid weaker progress in vaccination and limited stimulus spending. A slow job recovery is projected in Africa, Latin America and the Caribbean, and West Asia. In many countries, the pace of job creation is insufficient to compensate for previous job losses.
WESP was released two days after the World Bank’s latest Global Economic Prospects report, which reached similar conclusions predicting that, given the rapid spread of the Omicron variant, the COVID-19 pandemic will continue to disrupt economic activity in the near future.