UN predicts expanding global economic growth in 2017-2018
The United Nations predicted on Tuesday that the global economy will expand in the next two years, spurred by stronger growth in the last six months and a modest recovery in trade and investment.
In a mid-year update from its January forecast, the U.N. said the acceleration is underpinned by firm economic growth in many developed countries and strengthened prospects in countries in transition, with east and south Asia remaining the world's most dynamic regions.
But the U.N. report said "the outlook for some developing regions has deteriorated since January" and "prospects for Africa, in particular, raise concerns." It forecast negligible per capita growth in central, southern and west Africa as well as in South America in 2017-2018.
Overall, the U.N. forecast global economic growth of 2.7 percent this year and 2.9 percent in 2018 compared with a revised figure of 2.3 percent in 2016.
"The report confirms that at the global level economic growth has strengthened in recent months in line with the forecasts presented in January," Diana Alarcon, chief of the U.N.'s Global Economic Monitoring Unit, told a news conference launching the report.
"Industrial production has picked up, world trade is reviving and economic sentiment has generally improved," she said. "However, the modest strengthening of economic activity has not been evenly spread across countries."
Alarcon said economic prospects for some of the world's poorest countries are especially worrying.
According to the report, average GDP growth projections for many of the 48 least developed countries have been revised downward to growth of just 4.7 percent in 2017 and 5.3 percent in 2018 — figures significantly below the U.N. target of at least 7 percent annually to eradicate extreme poverty everywhere by 2030.
Under the current growth trajectory, and assuming no decline in income inequality, the report forecasts that nearly 35 percent of the population in the least developed countries will remain in extreme poverty by 2030. Over half these countries are in Africa.
Alarcon said "ending poverty in all its forms will require countries to tackle inequality issues more rigorously including commitments to share prosperity both within and across national borders."
As for the United States, the world's largest economy, the U.N. forecast economic growth of 2.1 percent in both 2017 and 2018, compared with 1.6 percent in 2016. In China, the second-largest economy, the U.N. forecast 6.5 percent growth in both 2017 and 2018, compared with 6.7 percent in 2016.
The report also highlights "the high degree of uncertainty" on international economic policy which Alarcon said "continues to cloud the outlook and heightens uncertainty around prospects for world trade, development aid and climate targets."
Britain's decision to leave the European Union is one source of policy uncertainty, the report said, along with a resurgence of trade protectionism and the U.S. announcement of a sweeping review of its trade relationships.
The U.N. also noted that businesses in many emerging economies are vulnerable to sudden changes in financial conditions and destabilizing capital outflows which could be triggered by faster-than-expected interest rate hikes in the United States.