Global Economy Expected to Grow 3% in 2019 Despite Risks - World Economic Situation and Prospects

Speakers: Mr. Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development and Dawn Holland, Chief, Global Economic Monitoring Branch, Economic Analysis and Policy Division, Department of Economic and Social Affairs (EPAD/DESA).
The World Economic Situation and Prospects (WESP) report is a joint product of the United Nations Department of Economic and Social Affairs (UN/DESA), the United Nations Conference on Trade and Development (UNCTAD) and the five United Nations regional commissions (Economic Commission for Africa (ECA), Economic Commission for Europe (ECE), Economic Commission for Latin America and the Caribbean (ECLAC), Economic and Social Commission for Asia and the Pacific (ESCAP) and Economic and Social Commission for Western Asia (ESCWA)).
WESP Report website:
UN Chief Economist Elliott Harris said while global economic growth remained on a fairly steady trajectory in 2019, “the world economy is faced with a confluence of rising risks with the potential to severely disrupt economic activity and inflict significant damage on longer term development prospects.”
Harris spoke to reporters in New York today (21 Jan) on the findings of the UN’s annual World Economic Situation and Prospects report (WESP). The report projected that economic activity was expected to expand at a steady pace of three percent and found that unemployment rates had dropped to historic lows in many countries.
However, Harris said a closer look beneath the surface reveals significant issues with the foundations and quality of global economic growth. He said growth is “uneven, and it is often failing to reach the countries and the groups where it is most needed” with per capita incomes expected to “stagnate or grow only marginally in 2019 in several parts of Africa, Western Asia, and Latin America and the Caribbean.”
He said international trading tensions escalated, particularly between the United States and China, while public and private debt has risen to historic highs. The Chief Economist said while adverse effects have been largely contained, these factors cast a shadow over the economic outlook for 2019 and beyond.
Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development:
“In the case of a downturn in global economic activity, policy makers around the world will struggle to react forcefully because monetary and fiscal space in many countries is now much more limited than it was at the outbreak of the global financial and economic crisis a decade ago. And, given the waning support for multilateral approaches, coordinated action in response to the shock, or any shock, similar to the response to the global financial crisis may be more difficult to achieve.”
Harris said long-term challenges such as climate change “have now become increasingly short-term risks.” He added, “In recent years, we have seen an increasing number of extreme weather events that have had a particularly damaging effect on vulnerable countries, including many Least Developed Countries and Small Island Developing States; building resilience by supporting the most vulnerable countries to invest in climate- resilient infrastructure, is as important as rebuilding after a disaster.”
The Chief Economist underscored that the “essential transition” towards sustainable consumption and production patterns globally was “simply not happening fast enough.” He said economies remained far too dependent on carbon, energy, and the use of resources and stressed the need to “to delink economic growth from environmental degradation and this means shifting our resources away from investments in the old brown technologies towards investments in new, more resource-efficient and low-carbon technologies.”
Harris emphasized that global problems could only be confronted through collective action, adding that a withdrawal from multilateralism would further set back those who are already being left behind.
He said, “Some countries are doing reasonably well, but other are not. By the same token, income levels are varying across the world. Inequality has risen within countries. And what we see happening is more and more people are registering dissatisfaction with the outcomes of our global system, without having their policy makers explain to them what actually is going on. And so that frustration then makes for a growing readiness to, let’s say, be receptive, if you will, to nationalist arguments saying ‘let’s do what is best for us individually, as a country, as a nation’; rather than the support for the multilateral approach that we have seen over the past 40 years. And we think that that is a real problem, because it does undermine the ability of the world to deal with some of our global problems in a collective manner.”