The global economy will grow around 3 per cent annually in 2019 and 2020, but waning support for multilateralism, escalating trade disputes, increasing debt and rising climate risks are clouding prospects, the United Nations said Monday.
The UN's report, the World Economic Situation and Prospects 2019, said signs suggest that the economic growth spurt "has peaked," forecasting that global growth will remain steady at just below the 3.1 per cent expansion of 2018.
But the report also stressed that economic growth is uneven and often doesn't reach poorer nations. Per capita income is expected to stagnate or see only marginal growth this year in parts of Africa, western Asia, Latin America and the Caribbean, it said.
While economic indicators remain "largely favourable," UN Secretary-General Antonio Guterres said the report "raises concerns over the sustainability of global economic growth in the face of rising financial, social and environmental challenges."
"Global levels of public and private debt continue to rise," the UN chief said in the foreword. "Economic growth is often failing to reach the people who need it most. The essential transition towards environmentally sustainable production and consumption is not happening fast enough, and the impacts of climate change are growing more widespread and severe."
Guterres said one overarching message is clear: While short-term challenges need to be addressed it's critical to advance long-term UN goals including combatting poverty and preserving the environment. This requires nations working together to tackle climate change, mobilize funds to promote development and redress inequality, he said.
The 218-page report was produced by the UN Department of Economic and Social Affairs, the U.N. Conference on Trade and Development and the UN's five regional economic commissions.
The report was issued on the same day that the International Monetary Fund cut its growth forecast for 2019 to 3.5 per cent from a prediction of 3.7 per cent in October, citing heightened trade tensions and rising interest rates. And China, the world's second-largest economy, said its economic growth slowed to 6.6 per cent in 2018, the weakest since 1990.
Explaining the higher IMF forecast, Dawn Holland, chief of the UN's Global Economic Monitoring Branch, said the UN and the IMF use different methodologies. The IMF gives more weight to rapidly growing countries like China and India and to developed economies, "which means that the average is about 0.5 per cent higher" than the UN average, she said.
The UN forecasts that China's economic growth will slip to 6.3 per cent in 2019. Holland said this largely reflects China's longer-term shift "towards a more sustainable path which includes an increase in domestic demand, in consumption, offsetting slower growth in investment and export-driven growth."
For the United States, the world's largest economy, the UN is forecasting that economic growth will decrease from 2.8 per cent in 2018 to 2.5 per cent in 2019 and 2 per cent in 2020. For the European Union, it projects growth will remain steady at the current annual rate of 2 per cent through 2020.
According to the report, several major commodity-producing countries are expected to see a moderate pick-up in economic growth in the next two years, from relatively low bases.
Growth in Russia, a major oil exporter, is predicted to drop from 1.5 per cent in 2018 to 1.4 per cent in 2019 but then rise to 2.1 per cent in 2020. Brazil, which exports soybeans, iron ore, sugar and oil, is forecast to see 2018 growth of 1.4 per cent rise to 2.1 per cent in 2019 and 2.5 per cent in 2020. Nigeria, also an oil exporter, is forecast to increase economic growth from 1.9 per cent in 2018 to 2.1 per cent in 2019 and 2.7 per cent in 2020.
