The World Economic Situation and Prospects (WESP) mid-year report warned widening inequality is threatening global growth, projected at 5.4 per cent this year.
Although the outlook for global growth has improved, the ongoing impacts of the COVID-19 pandemic, as well as inadequate progress on vaccination in poorer countries, are putting recovery at risk, according to the latest UN economic forecast, published on Tuesday.
Vaccine access critical
“Vaccine inequity between countries and regions is posing a significant risk to an already uneven and fragile global recovery”, said UN Chief Economist Elliott Harris.
“Timely and universal access to COVID-19 vaccinations will mean the difference between ending the pandemic promptly and placing the world economy on the trajectory of a resilient recovery, or losing many more years of growth, development and opportunities.”
The mid-year forecast updates the WESP report published in January by the UN Department of Economic and Social Affairs (DESA).
It examines the performance of the world economy since the pandemic began, as well as the impact of global policy responses and post-crisis recovery scenarios.
A mixed picture
The 5.4 per cent in projected global growth this year follows a sharp contraction of 3.6 per cent in 2020, and reflects an upward revision from the original forecast.
While the world’s two largest economies – China and the United States – are on the road to recovery, growth remains fragile and uncertain in several countries in South Asia, sub-Saharan Africa, and Latin America and the Caribbean.
Many countries will not see economic output return to pre-pandemic levels until 2022 or 2023.
“For a vast majority of developing countries, economic output will remain below 2019 levels for most of 2021”, the authors said. “Amid insufficient fiscal space to stimulate demand, many of these countries will face low and stagnant growth and the prospect of a lost decade.”
Trade strong but uneven
The report also details strong but uneven recovery in global trade, which has already surpassed pre-pandemic levels due to demand for electrical and electronic equipment, personal protective equipment, and other manufactured goods.
Economies which depend on manufacturing have fared better, however countries which rely on tourism, or commodities, are unlikely to see a quick rebound.
Tourism services in particular, will remain depressed due to slow lifting of restrictions on international travel, coupled with fears of new waves of COVID-19 infection.
Women hit hardest
The pandemic has pushed an estimated 114.4 million people into extreme poverty, with women accounting for around 58 million of that total.
The report found that while women have been at the forefront of the crisis—
representing most health workers, caregivers and essential service providers—they have also been the hardest hit in several ways.
During the pandemic, labour force participation shrunk by two per cent worldwide, compared to only 0.2 per cent during the global financial crisis in 2007-8, but more women than men were forced to leave their jobs to meet family demands. Women-owned businesses have also fared disproportionately worse, according to the report.
COVID-19 has also dealt sharp blows to services for women’s health, and reproductive health, and the disruption to education has helped undermine global progress towards gender equality. There has also been a spike in gender-based violence, which UN Women has labelled a “shadow pandemic.”
Ensure inclusive recovery
As women are also underrepresented in decision-making surrounding the pandemic, and in economic policy responses, the report highlighted why recovery must be inclusive.
“The pandemic has pushed nearly 58 million women and girls into extreme poverty, dealing a huge blow to poverty reduction efforts worldwide, and exacerbated gender gaps in income, wealth and education, impeding progress on gender equality”, said Hamid Rashid, Chief of the Global Economic Monitoring Branch at DESA, and the lead author of the report.
“Fiscal and monetary measures to steer recovery must take into account the differentiated impact of the crisis on different population groups, including women, to ensure an economic recovery that is inclusive and resilient.”