The world economy has experienced an upturn in 2017 and is now growing by about 3%—the highest growth since 2011—as crisis-related fragilities and the adverse effects of other recent shocks subside, according to the United Nations in its latest report.
The improvement is widespread, with roughly two-thirds of countries worldwide experiencing stronger growth in 2017 than in the previous year, observed the World Economic Situation and Prospects 2018, launched December 11 in New York.
Global growth is expected to remain steady at 3.0% in 2018 and 2019.
Launching the report, UN Under-Secretary-General for Economic and Social Affairs Liu Zhenmin noted: “While the upturn in global growth is a welcome sign of a healthier economy, it is important to remember that this may come at an environmental cost. This calls for stronger efforts to delink economic growth and environmental degradation—as also emphasized by the UN Climate Change Conference in Bonn last month.”
The recent pickup in global growth, the report stated, stems predominantly from firmer growth in several developed economies, although East and South Asia remain the world most dynamic regions. In 2017, East and South Asia accounted for nearly half of global growth, with China alone contributing about one-third.
The end of recessions in Argentina, Brazil, Nigeria, and the Russian Federation also contributed to the rise in the rate of global growth between 2016 and 2017. The upturn has been supported by a rebound in world trade and an improvement in investment conditions. The challenge is to channel this into a sustained acceleration in productive investment to support medium-term prospects, said the report.
“Despite the improved short-term outlook, the global economy continues to face risks—including changes in trade policy, a sudden deterioration in global financial conditions and rising geopolitical tensions,” it warned.
The world economy also faces longer-term challenges. The report highlights four areas where the improved macroeconomic situation opens the way for policy to address these challenges: increasing economic diversification, reducing inequality, supporting long-term investment, and tackling institutional deficiencies.
The report noted that reorienting policy to address these challenges can generate stronger investment and productivity, higher job creation, and more sustainable medium-term economic growth.
The report also said that preliminary estimates suggest that the level of global energy-related CO2 emissions increased in 2017 after remaining flat for three consecutive years. The frequency of weather-related shocks continues to increase, also highlighting the urgent need to build resilience against climate change and prioritize environmental protection.
Policies that target international shipping and aviation emissions—which do not fall under the purview of the Paris Agreement—need to be strengthened, as emissions from these sectors continue to grow faster than those from road transport, it further said.
Photo: Borja Fernandez
