UN reduces its growth forecast for world economy to 1.9 pct.

United Nations, Jan 25 (EFE).- The United Nations on Wednesday reduced its forecast for average world economic growth in 2023 to 1.9 percent due to the marked economic deceleration in the United States and Europe.

The figure is a significant reduction from earlier forecasts prepared by the international organization, which last May predicted 3.1 percent growth for the overall world economy this year.

Looking to 2024, the UN expects that the effect of factors like inflation and interest rate hikes adopted by various nations to keep prices in check will be somewhat less and thus the global economy will grow at a 2.7 percent rate.

However, the UN said that this 2024 growth rate is still very uncertain and will depend on the ongoing adjustments in monetary policy, what transpires in the war in Ukraine and the possibility of more problems in international supply chains.

This year, the deceleration will be especially significant in some of the world’s most advanced economies like the US and the European Union.

The UN predicts that the US gross domestic product will grow by only 0.4 percent this year and by 1.7 percent in 2024, with less consumption resulting from relatively high interest rates and the loss of household purchasing power.

In the EU, the international body’s expectation is for 0.2 percent growth this year and 1.6 percent next year, a considerable reduction with respect to earlier forecasts that it explained by referring to the consequences of the war in Ukraine.

Several European countries – including Germany and Italy – in 2023 will experience slight recessions as a result, above all, of high energy prices, inflation and more complicated financial conditions for consumers.

In the case of Spain, the UN foresees growth of 0.9 percent this year and 2.2 percent next year, while anticipating that the economy of the United Kingdom will contract by 0.8 percent in 2023 but increase by 1 percent in 2024.

The complicated economic situation will be reflected throughout almost the entire world, with the so-called economies in transition contracting by 0.8 percent overall but Russia – deemed to be one of those economies – contracting by 2.9 percent.

In China, the lifting of many restrictions imposed to combat Covid-19 will accelerate growth to 4.8 percent this year, compared to 3 percent in 2022, but the UN warned that the reopening of that economy will be a complicated endeavor and that the Asian giant will remain far from regaining the growth rate it enjoyed prior to the coronavirus pandemic.

The developing countries will see average growth of 3.9 percent this year, the UN said, and 4.1 percent next year, but different countries in different regions will see widely varying figures.

For example, while South Asia will grow by 4.8 percent and 5.9 percent this year and next, respectively, Latin America and the Caribbean will grow by only 1.4 percent and 2.5 percent during this year and next, respectively, according to the world body.

EFE –/bp