Friday, July 19, 2024
HomeBusinessEconomyWorld economy to shrink by 3.2 percent, new UN report projects

World economy to shrink by 3.2 percent, new UN report projects

NEW YORK, USA – Against the backdrop of the raging COVID-19 pandemic, the world economy in 2020 is projected to shrink by 3.2 percent, racking up some $8.5 trillion in overall losses – wiping out nearly four years of output gains, according to a mid-year economic analysis by the United Nations.

In its World Economic Situation and Prospect (WESP) report update, launched on Wednesday, the UN Department of Economic and Social Affairs (DESA) said that as of mid-2020, the gross domestic product (GDP) in developed countries will plunge to -5.0 percent, while the output of developing countries will shrink by 0.7 percent.

“The global economic outlook has changed drastically since the launch of WESP 2020 in January”, observed Elliott Harris, UN chief economist and assistant secretary-general for economic development.

The coronavirus has unleashed a health and economic crisis, unprecedented in scope and magnitude, with lockdowns and border closures paralyzing economic activity and laying off millions of workers globally.

“With the large-scale restrictions of economic activities and heightened uncertainties, the global economy has come to a virtual standstill in the second quarter of 2020,” he added. “We are now facing the grim reality of a severe recession of a magnitude not seen since the Great Depression.”

Meanwhile, to fight the pandemic and minimize the impact of a catastrophic economic downturn, Governments globally are rolling out fiscal stimulus measures that equal roughly 10 percent of the world’s GDP.

Although new infections and COVID-19-related death rates have recently slowed, the pandemic’s future course remains uncertain, as does the economic and social consequences that will follow.

Torn between saving lives and reviving the economy, some governments are already beginning to cautiously lift restrictions to jumpstart their economies.

But recovery will largely depend on how well public health and fiscal measures work together to stem the spread of the virus, minimizing reinfection risks, safeguarding employment and restoring consumer confidence so that people start spending again.

“The pace and strength of the recovery from the crisis”, explained Harris, will also rest on “the ability of countries to protect jobs and incomes, particularly of the most vulnerable members of our societies”.

Without a quick breakthrough in vaccine development and treatment, DESA maintains that “the post-COVID-19 world will likely be vastly different”, from the one we knew.

Although a modest rebound of around 3.4 percent, mostly recovering lost output, is expected for 2021, the report spelled out that “the possibility of a slow recovery and prolonged economic slump, with rising poverty and inequality, looms large”.

Trade and tourism are paralyzed, while large deficits and high levels of public debt will pose significant challenges for developing countries and small island States.

The UN forecast makes clear that stronger multilateral support and solidarity to contain the pandemic, along with economic and financial assistance to countries hardest hit by the crisis, will remain “critical for accelerating recovery and putting the world back on the trajectory of sustainable development”.



Please enter your comment!
Please enter your name here


Caribbean News

Caribbean Export – Pleion Group Inc signs MOU to enhance regional trade and logistics

MOU solidifies the Caribbean Export and Pleion Group Inc., partnership, creating a framework for joint initiatives. CIF 2024 MOU signing ceremony emphasizing the...

Global News

FCA calls on firms to improve treatment of politically exposed persons – PEPs

LONDON, England, (FCA) - The Financial Conduct Authority (FCA) has told financial firms – including banks, payment firms and lenders – to do more...