Modest global economic recovery is expected in 2017-18 but this should be seen as a sign of stabilisation rather than the harbinger of a sustained recovery, according to the UN.
In its World Economic Situation Prospects 2017 report, the UN said the world economy expanded by just 2.2% in 2016, the slowest rate of growth since recession struck worldwide in 2009.
The report predicts average growth of 2.7% in 2017 and 2.9% in 2018, though developing countries will remain the main drivers of growth, accounting for about 60% of global GDP growth.
However, GDP growth in the least developed countries is anticipated to remain well below the UN Sustainable Development Goal of at least 7%.
“Under the current growth trajectory and assuming no decline in income inequality, nearly 35% of the population in least developed countries may remain in extreme poverty by 2030,” said the UN.
Many economies had been struck by a significant downturn in private and public investment in recent years. Growth in labour productivity had been particularly slow in most of the developed economies and in many large developing economies.
But the UN said as commodity prices trend higher, “commodity-exporting economies are likely to see some recovery in growth”.
The report called for new capital to be invested as a driver of technological change and efficiency. Key areas for investment included research and development and education infrastructure.
“Given the close linkages between demand, investment, trade and productivity, the extended episode of weak global growth may prove self-perpetuating in the absence of concerted policy efforts to revive investment and foster a recovery in productivity,” said the UN.
The report also noted that global carbon emissions had remained static for two consecutive years – an indication of the declining energy intensity of economic activities and the rising importance of renewable sources of energy.
And renewable energy investment in developing countries exceeded that of developed countries in 2015.
Yet without concerted policy efforts in the private and public sectors recent improvements in emissions mitigation could be reversed.
“The global economy needs policy measures that move beyond demand management,” said the UN. It said these measures needed to be “fully integrated with structural reforms that target the various aspects of sustainable development, including poverty, inequality and climate change”.
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