According to the UN, the prospects for economic growth in 2020 depend on the resolution of trade disputes and uncertainties. This year's per capita income is expected to stagnate or decline in 1 in 5 countries.
Undermined by protracted trade disputes, today's economy (in spanish: actualidad económica) recorded its weakest growth in a decade, declining to 2.3 percent in 2019. However, according to the United Nations' "State and Prospects of the World Economy" report for 2020 released today, if risks are contained, global economic activity could recover slightly in 2020.
According to the report and taking into account the current economic situation, if growth of 2.5 percent is possible in 2020, an increase in trade tensions, the financial crisis or an escalation in geopolitical tensions could slow the recovery. Pessimistic forecasts predict that global growth may slow to just 1.8 percent this year. A prolonged slowdown in global economic activity could significantly hamper sustainable development, including the achievement of goals aimed at eradicating poverty and creating decent jobs for all. At the same time, widespread inequalities and the worsening climate crisis are fuelling growing discontent in several parts of the world.
António Guterres, UN Secretary General, warned that "these risks could seriously and durably jeopardize development prospects". They also threaten to encourage the proliferation of alternative policies, at a time when global cooperation is essential.
In the United States, the recent interest rate cuts ordered by the Federal Reserve could somehow support economic activity. However, persistent political uncertainties, the erosion of business confidence, and the lack of financial stimulus are expected to slow U.S. GDP growth from 2.2 percent in 2019 to 1.7 percent in 2020. In the European Union, the industrial production sector will continue to be plagued by global uncertainty, a situation that, however, can be partially offset by stable growth in private consumption, leading to a slight increase in GDP, which will fall from 1.4 percent in 2019 to 1.6 percent in 2020.
Despite the considerable challenges facing the economy today, East Africa remains the fastest growing region in the world and the largest contributor to global growth, according to the report. In China, GDP growth is expected to slow gradually from 6.1 percent in 2019 to 6.0 percent in 2020 and 5.9 percent in 2021, driven by more accommodative monetary and fiscal policies. In 2020, growth is expected to accelerate slightly in other major emerging countries such as Brazil, India, Mexico, the Russian Federation and Turkey.
Renewable energy and resilient infrastructure," said Elliot Harris, United Nations Chief Economist and Under-Secretary-General for Economic Development...
A change in the energy mix would encourage economic growth while limiting carbon emissions.
To combat climate change, the world's growing energy needs must be met by renewable or low-carbon energy sources. This option would require massive adjustments in the energy sector, which currently accounts for about three-quarters of global greenhouse gas emissions. Bringing the per capita emissions values of developing countries closer to those of developed countries would increase global carbon emissions by more than 250 percent, in contrast to the goal of zero net emissions by 2050 set at the global level.
The urgency of the energy transition continues to be underestimated, resulting in short-sighted decisions such as those related to the development of investments in oil and gas exploration and energy production. Any delay in taking decisive action on energy transition could double the final costs. The transition to a cleaner energy mix will not only be beneficial to the environment and health, but will also create economic opportunities for several countries.
Need for a more balanced energy mix
Too much reliance on monetary policy is not only insufficient to boost growth, but also generates considerable costs, particularly by exacerbating risks to financial stability. A more balanced policy mix must be adopted in the energy mix, one that stimulates economic growth while strengthening social inclusion, gender equality, and environmentally sustainable production.
"The non-inclusiveness of growth is causing growing dissatisfaction, leading to widespread calls for change around the world. The impact of policy measures on income distribution and the environment should receive much more attention," said Mr. Harris.
All things considered, it remains doubtful whether these economic forecasts are really accurate. The economy is going through a bad time because of the pandemic crises that have hit everyone and the most we can do is be informed. If you are looking for a way to get informed of all the news related to the world economy, you should visit this economic news page (in spanish: página de noticias de economía). Here you will be able to keep up to date with any relevant information regarding economic matters that are happening in the world as the importance of being informed is vital.