Inequalities, lack of uniform growth among countries making global economic recovery difficult, shows UN’s Trade and Development Report 2023
In 2023, there will be a global recession, like that in 2009. And it may continue in 2024 as well. As per the UN’s latest Trade and Development Report 2023, the world economy growth is projected to be 2.4 per cent.
The United Nations Conference on Trade and Development (UNCTAD) — that brought out this annual report — has termed this growth as “stalled speed”. A global recession is defined as when the growth rate hits 2.5 per cent and below.
“(The current growth rate) meets the definition of a global recession,” said the UN body in a statement on the report released October 4, 2023.
“These are among the lowest growth rates of the last four decades, outside of crisis years. Moreover, the figure for 2023 is below the conventional threshold of 2.5 per cent which marks recession in the global economy,” the authors of the report estimated.
In the immediate future, there are no signs of a revival of the world economy. According to the latest projection of UNCTAD, in 2024 the growth rate will have an insignificant increase to hit 2.5 per cent. However, the report warned, “These projections are subject to downside risks which have increased in the recent months (of 2023).”
The UNCTAD report has attributed this recession, after the contraction in pandemic years, to unprecedented growing inequalities and uneven growth among various regions.
“All regions, except for East and Central Asia, are expected to post slower growth this year than in 2022,” said the UNCTAD report, adding, “with the largest drop (2.3 points) occurring in Europe.”
India, among the G20 countries, will have higher growth like a few other countries in this group — Brazil, China, Japan, Mexico and the Russian Federation; but the growth rates are uniform among these countries. “…the world economy is experiencing a lacklustre recovery reminiscent of the aftermath of the 2007-2009 financial crisis,” noted the report.
For India, the growth registered is mostly driven by government spending and supporting external trade situations. But its major concern is the “historic” unemployment rate of 8.5 per cent in June 2023. More to it, the economic growth might not be general news of wellbeing for all, because, the report says, “inequality has also significantly increased — as suggested by data on real wages and the labour share — which could hinder growth.”
Unequal growth and inequalities will mar the future economic growth and also wealth distribution from whatever the growth delivers. “..2023 may turn out to be an inflection point in a fragile and uneven global recovery. Without adequate multilateral policy responses or coordination mechanisms, today’s brittle economies and diverse shocks might evolve into tomorrow’s systemic crises.”
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