New York, January 13 – The current global economic recovery is losing steam after recording a solid expansion of 5.5 per cent under the pandemic in 2021, the United Nations World Economic Situation and Prospects (WESP) 2022 said. The report projected global economic output to grow by only 4.0 per cent in 2022 and 3.5 per cent in 2023 as the world is subdued by rising Covid-19 infections, persisting labor market shortages, supply-chain challenges and inflationary pressures.

The report attributed global recovery in output in 2021 to robust consumer spending and some uptake in investment.

“Trade in goods bounced back, surpassing the pre-pandemic level. But growth momentum slowed considerably by the end of 2021 including in big economies like China, the European Union and the United States of America, as the effects of fiscal and monetary stimuli dissipated and major supply-chain disruptions emerged. Growth impetus generally has been weaker in most developing countries and economies in transition. While higher commodity prices have helped commodity-exporting countries at large, rising food and energy prices have triggered rapid inflation, particularly in the Commonwealth of Independent States (CIS) and Latin America and the Caribbean. Recovery has been especially slow in tourism-dependent economies, notably in the small island developing states.”

“In this fragile and uneven period of global recovery, the World Economic Situation and Prospects 2022 calls for better targeted and coordinated policy and financial measures at the national and international levels,” said UN Secretary-General Antonio Guterres. “The time is now to close the inequality gaps within and among countries. If we work in solidarity – as one human family – we can make 2022 a true year of recovery for people and economies alike.”

The report said employment levels are projected to remain well-below pre-pandemic levels in 2022 and 2023 and possibly beyond with labor forces in the United States and Europe remaining at historically low levels as people who lost jobs or left the labor market under the pandemic have not yet returned. It projected that employment growth in developing countries will remain weak because of lower vaccination progress and limited stimulus spending. Africa, Latin America and the Caribbean, and Western Asia are projected to see a slow recovery of jobs and job creation in many countries will remain insufficient to offset earlier employment losses.

The report said higher levels of economic inequality within and between countries are emerging as a “longer-term scar of Covid-19.”

“In the coming years, a full recovery of GDP per capita will remain elusive for many developing countries. Africa and Latin America and the Caribbean are projected to see gaps of 5.5 and 4.2 percentage points, respectively, compared to pre-pandemic projections. These persistent output gaps will exacerbate poverty and inequality and thwart progress on achieving sustainable development and tackling climate change. In contrast, the GDP per capita of the developed economies, relative to pre-pandemic projections, is expected to almost fully recover by 2023.”

The report said the pandemic’s adverse impacts on economic growth and employment have significantly undermined progress on global poverty reduction, dashing hopes of achieving the Sustainable Development Goal of ending extreme poverty.

It said the number of people living in extreme poverty globally is projected to decrease slightly to 876 million in 2022 but is expected to remain well above pre-pandemic levels. Poverty levels will continue to increase is the world’s most vulnerable economies whereas fast-developing economies in East Asia and South Asia and developed economies are expected to experience some poverty reduction.

“Insufficient fiscal space and the slow recovery of employment in general will undermine poverty reduction in many developing countries in the near term. This is particularly the case in Africa, where the absolute number of people in poverty is anticipated to rise through 2023,” the report said.

For more information, please visit: https://www.bit.ly/wespreport. 

The report is produced by the UN Department of Economic and Social Affairs (UN DESA), in partnership with the UN Conference on Trade and Development (UNCTAD) and the five UN regional commissions: Economic Commission for Africa (UNECA), Economic Commission for Europe (UNECE), Economic Commission for Latin America and the Caribbean (UNECLAC), Economic and Social Commission for Asia and the Pacific (UNESCAP) and Economic and Social Commission for Western Asia (UNESCWA). The UN World Tourism Organization (UNWTO) also contributed to the report.

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