UN fears war will cost a point of global economic growth

The UN on Thursday cut its forecast for global economic growth for 2022 by one point from 3.6%, calculated six months ago, to 2.6%, due to the severe impact of the war in Ukraine, which is already taking its toll. demands of the high prices in the energy and food markets.

If fulfilled, the new forecasts would mean the global economy would grow by less than half in 2021, when global GDP rose 5.5% after the 3.5% drop it suffered in 2020 due to the covid pandemic.

“The economic effects of the war in Ukraine will exacerbate the slowdown in the global economy and weaken the expected recovery after the pandemic,” UNCTAD Secretary General Rebeca Grynspan warned when presenting the report.

DEEP RECESSION FOR RUSSIA, LOW GROWTH FOR EUROPE

The country hardest hit by the price crisis caused by the war is predicted to be the cause: Russia, whose GDP will collapse by 7.3% in 2022, according to UNCTAD, as the only one of the major economies that would may enter this year in recession.

By extension, according to the report, the European continent will be the country that will grow the least this year (0.9%), while America will grow at 2.4%, Asia at 3.8%, Africa at 1.8% and Oceania 3% (the latter is the only one whose figures have been revised upwards).

UNCTAD also lowered its growth forecasts for most major economies, in the case of the EU, which, according to the report, will increase GDP by 1.6% (1.7 points less than it was calculated six months ago).

The United States grew by 2.4%, six tenths less than previously forecast, China by 4.8% (nine tenths less), Japan by 2% (one tenth less) and India by 4.6% (2.1 points less), always according to the UNCTAD study.

LESS IMPACT IN US, MORE FOR GERMANY

The report analyzes that the US is “relatively isolated from the current shocks, but will come under pressure from the rise in food and fuel prices”, something that is even more acute in the EU and especially in economies such as Germany. , which are highly dependent on gas imports. Russian born.

In contrast, China will be particularly affected by the surge in grain prices of which it is a net importer, exacerbating the situation of an economy already affected by the global supply chain problems posed by the pandemic and by the current wave of infections of covid in east asia.

UNCTAD expert Richard Kozul-Wright told a news conference that the improvement or deterioration of any of these prospects will depend on the duration of the Ukrainian conflict and the resulting sanctions against Russia for its invasion of the neighboring country.

FOOD AND ENERGY EXPORTERS CAN BENEFIT

On the other hand, the report revised its forecasts for some major commodity exporters upwards due to the rise in commodity prices, in the case of Argentina (4.6%, up 1.7 points), Saudi Arabia (4. .8%, 1.5 points more), Canada 3%, one tenth more) or Australia (3.3%, half a point more).

Kozul-Wright stated that many are beginning to compare the current global economic situation to the oil crisis of 1973, although he emphasized that there is no spiral of price and wage increases as there was for the time being.

One factor that could complicate the current situation, unlike the crisis half a century ago, is “the fact that many countries have accumulated large amounts of foreign debt over 30 years,” something that was accentuated during the pandemic, the expert warned.

IMF AND WB MUST FILL OUT, SAYS GRYNSPAN

Grynspan stressed that the current negative situation requires that at the next meetings of the International Monetary Fund (IMF) and the World Bank (WB) “tools to support developing countries are similar to those put in place to help Ukraine”.

This is especially urgent for the more than a hundred countries that are net food importers, including many developing countries, the head of UNCTAD warned, citing that Egypt, Sri Lanka or Pakistan have already asked for help to cope to the strong price increases.

UNCTAD also expresses concern in the report about “the combination of a weakening world demand with insufficient policy coordination at the international level and the high debts resulting from the pandemic”.

Some factors that could create “financial shockwaves that could send developing countries into a spiral of insolvency, recession and development stagnation,” notes the report, which calculates that these countries will need $310,000 million to cover the payment of Europe’s foreign debt. . 2022.

Source: El heraldo

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