NEW YORK
\nThe global economy is expected to grow by only 3.1 percent this year, down from the 4.0 percent projected in January, largely derailed by the war in Ukraine.
\nThe UN\u2019s latest World Economic Situation and Prospects (WESP) report stated this. The mid-year forecast reveals how the conflict has upended the fragile economic recovery from the Covid-19 pandemic, sparking a humanitarian crisis in Europe, surging food and commodity prices, and exacerbating inflationary pressures.
\nGlobal inflation is also set to reach 6.7 percent this year, or twice the average of 2.9 percent during the period from 2010 to 2020, with sharp rises in food and energy prices.
\nThe downgrade in growth prospects includes the world\u2019s largest economies \u2013 the United States, China, and the European Union \u2013 as well as the majority of other developed and developing economies. Higher energy and food prices are particularly affecting developing economies that import commodities, and the outlook is compounded by worsening food insecurity, especially in Africa.
\nThe WESP report, published by the UN\u2019s Department of Economic and Social Affairs (DESA), examines how the spillover effects of the war in Ukraine are impacting different regions.
\nRussia\u2019s invasion began on 24 February, and in addition to the tragic loss of life and the unfolding humanitarian crisis – with more than six million refugees alone – it has also exacted heavy tolls on the economies of both countries. Neighbouring economies in Central Asia and Europe, including the European Union (EU), are also affected.
\nThe rise in energy prices has dealt a shock to the EU, which imported nearly 57.5 per cent of its total energy consumption in 2020. Economic growth is forecasted to grow by only 2.7 per cent, instead of the 3.9 per cent projected in January.
\nNearly a quarter of Europe\u2019s energy consumption in 2020 came from oil and natural gas imported from Russia, and a sudden halt in flows is likely to lead to increased energy prices and inflationary pressures.
\nThe EU member states from Eastern Europe and the Baltic region are severely impacted as they are already experiencing inflation rates well above the EU average, the report said.
\nIn the world\u2019s developing and Least Developed Countries (LDCs), high inflation is reducing the real income of households. This is especially the case in developing countries, where poverty is more prevalent and wage growth remains constrained, while fiscal support to lessen the impact of higher oil and food prices is limited.
\nRising food and energy costs are also having knock-on effects on the rest of the economy which is presenting a challenge to inclusive post-pandemic recovery as low-income households are disproportionately affected.
\nAdditionally, \u201cmonetary tightening\u201d by the Federal Reserve in the United States, the country\u2019s central banking authority, is also set to raise borrowing costs and worsen financing gaps in developing nations, including the world\u2019s LDCs.
\n\u201cThe developing countries will need to brace for the impact of the aggressive monetary tightening by the Fed and put in place appropriate macroprudential measures to stem sudden outflows and stimulate productive investments,\u201d said Hamid Rashid, DESA\u2019s Chief of the Global Economic Monitoring Branch, and the lead author of the report.<\/p>\n","protected":false},"excerpt":{"rendered":"
NEW YORK The global economy is expected to grow by only 3.1 percent this year, down from the 4.0 percent projected in January, largely derailed by the war in Ukraine. The UN\u2019s latest World Economic Situation and Prospects (WESP) report stated this. The mid-year forecast reveals how the conflict has upended the fragile economic recovery […]<\/p>\n","protected":false},"author":2,"featured_media":261523,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":{"0":"post-261504","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"yoast_head":"\n