Growth in the world economy is surpassing expectations and global GDP is now expected to expand by more than 3 per cent this year and in 2019, reflecting strong growth in developed countries and broadly favourable investment conditions, a new UN report finds.
But rising trade tensions, heightened uncertainty over monetary policy, increasing debt levels and greater geopolitical tensions can potentially thwart progress, according to the United Nations World Economic Situation and Prospects (WESP) as of mid-2018, launched today in New York.
According to the report, world economic growth is now forecast to reach 3.2 per cent both in 2018 and 2019, an upward revision by 0.2 and 0.1 percentage point, respectively. This revised outlook reflects further improvement in the growth forecast for developed economies due to accelerating wage growth, broadly favourable investment conditions, and the short-term impact of a fiscal stimulus package in the United States.
World trade growth has also accelerated, reflecting a widespread increase in global demand. Many commodity-exporting countries will also benefit from the higher level of energy and metal prices. While the modest rise in global commodity prices will exert some upward pressure on inflation in many countries, the report notes that inflationary pressures remain contained across most developed and developing regions.
Speaking at the launch, UN Assistant Secretary-General for Economic Development and Chief Economist Elliott Harris said the upward revision in the global economic forecast reflected in the report is positive news for the prospects of making tangible progress towards achieving the Sustainable Development Goals, but cautioned that “there is a strong need not to become complacent in response to upward trending headline figures.”
“The report underscores that the risks have increased as well and highlights the need to urgently address a number of policy challenges, including threats to the multilateral trading system, high inequality and the renewed rise in carbon emissions,” he added.