The United Nations revised its global economic forecast upward to 5.4 percent growth for 2021 on Tuesday, citing the rebounding Chinese and the US economies as reasons, but cautioned that rising COVID-19 cases and insufficient vaccine supply in many countries risk a broad-based recovery. The United Nations’ mid-2021 World Economic Situation and Prospects survey, which raised its growth forecast from 4.7% in January, cited rapid vaccine rollout in a few major economies, led by the United States and China, as well as a rise in global merchandise and manufactured goods trade, which has already reached pre-pandemic levels.
However, the United Nations warned that, this will unlikely be enough to boost the rest of the world’s economies, and that the economic outlook for countries in South Asia, Sub-Saharan Africa, Latin America and the Caribbean remains weak and uncertain. , Lead author Hamid Rashid, chief of the United Nations Department of Economic and Social Affairs’ Global Economic Monitoring Branch, said at a news conference, Because of signs of second and third waves of COVID-19 infections, Europe’s outlook is not as bright as we thought.”
“Right now, the most important problem we face in the world is that pathogens are still increasing in many parts of the world, and we’re seeing new variants and mutations affecting large populations in South Asia and Latin America”, he said. “In terms of recovery and global economic development, this is a huge obstacle.” “Vaccination is probably the number one thing right now to get the world economy back on track,” Rashid said. “Vaccine inequity is a significant problem,” he acknowledged. 5.4% growth would be considered a high rate of economic growth in normal times, he said, but it is barely offsetting last year’s losses this year, and growth is “very erratic and also very unpredictable.”
According to him, the United Nations expects the US economy to grow by 6.2% this year, “the fastest growth of the US economy since 1966,” and the Chinese economy to grow by 8.2%. India, Brazil, South Africa, and a slew of other developed nations, he said, are “weak points.” According to Rashid, developing countries’ growth rates used to be higher than the global average, but due to the pandemic, many developing countries and regions’ average growth rates are lower this year.
Investment has been one of the main drivers of economic growth, he said, with some nations, such as the United States, seeing just a 1.7% decrease in investment last year, while some developing countries saw investment fall by 4% of GDP or more. “The $16 trillion in support to offset the economic effects of the coronavirus pandemic was much needed to prevent a full collapse of the global economy,” Rashid said, “but it has not resulted in a massive increase in investment.”
He cautioned that “huge surges in stock market prices around the world” are creating “something of a financial stability risk around the world,” and that “we have to be careful about that risk because it might derail the recovery efforts moving forward.” The United Nations’ estimate of 5.4% growth this year, according to Rashid, is much more optimistic than that of other international organisations, such as the International Monetary Fund, which raised its 2021 outlook to 6% last month.
“We’re still cautious about the world economy,” Rashid said, “but there are a lot of uncertainties that we highlighted in our study, especially the spread of vaccination and coverage that must occur in the next six months to achieve the kind of growth rate that we project here.” The United Nations predicts global economic growth of about 4.7% in 2022, which is higher than the IMF’s estimate of 4.4%.
