UN forecasts at least 3% growth in global economy in next two years
A new United Nations report has confirmed that the world’s economy has improved and it expects a growth of 3% in 2014 though it remains vulnerable.
According to the UN World Economic Situation and Prospects 2014 (WESP) report, global economic growth should increase over the next two years with continuing signs of improvement.
“The global economy is expected to grow at a pace of 3% in 2014 and 3.3% in 2015, compared with an estimated growth of 2.1% for 2013,” said the report launched December 18, 2013.
The UN explained that its positive forecast for the global economy was due to improvements in the last quarter of 2013 despite subdued growth experienced in the second-half of 2013.
The report said the euro area has finally ended a protracted recession and growth in the United States has strengthened.
The report observed that a few large emerging economies, including China and India, managed to backstop the deceleration they experienced in the past two years and veered upwards moderately. “These factors point to increasing global growth,” it added.
“Our forecast is made in the context of many uncertainties and risks coming from possible policy missteps as well as non-economic factors that could stymie growth,” said Shamshad Akhtar, UN Assistant Secretary-General for Economic Development.
According to the WESP, inflationwill remain tame worldwide, but the employment situation will continue to be challenging.
While growth in international trade flows is expected to pick up moderately to 4.7% in 2014, the prices of most primary commodities are projected to be flat, although any unexpected supply-side shocks, including geo-political tensions, could push some of these prices higher.
The report warned that international capital flows to emerging economies are expected to become more volatile.
It also stressed that the risks associated with a possible bumpy exit from the quantitative easing programmes by the U.S Federal Reserve (Fed) threaten the global economy.
“As already seen somewhat during the summer of 2013, efforts by the Fed to pull out of quantitative easing programmes could lead to a surge in long-term interest rates in developed and developing countries,” the UN DESA stated.
With multiple and complex challenges facing the world economy, the report called for strengthening international policy coordination.
“The primary focus of globally-concerted and coherent policy actions should be a stronger recovery, particularly the recovery of jobs,” said Pingfan Hong, UN team leader for the report.
Hong advised that there must also be an increase attention to reducing the spillover effects coming from the large-scale, unconventional monetary policies adopted by major developed countries on developing countries and economies in transition, particularly when major developed countries start to unwind these policies.
By Ekow Quandzie