Good morning:
Thank you joining us for an update on the state of the world economy, as of mid-2016. The report presented today revises forecasts from the UN flagship publication World Economic Situation and Prospects 2016, which was released in January.
Our update paints a worrying picture of the world economy. Weak global growth continues to linger, with little prospect for a turnaround this year. The world economy is expected to grow by just 2.4 per cent ¨C the same low rate as in 2015. For next year, the global economy is projected to expand by 2.8 per cent, marking a very modest improvement and possibly reflecting the downturn bottoming out in Brazil and the Russian Federation. A sign of a broad-based revival of global growth remains elusive. As we embark on implementation of the 2030 Agenda for Sustainable Development, the bleak state of the world economy clearly poses significant challenges.
Forecasts for many countries in Africa, the Commonwealth of Independent States and Latin America have been revised downward over the past few months. Commodity-exporters, in particular, have suffered from a sharp drop in export revenue, mounting fiscal and current account shortfalls, and exchange rate pressures, with their challenges compounded by a tightening of macroeconomic policy stances.
While commodity prices have largely stabilised, they are expected to remain at low levels for the next two years. The report underscores that a further deterioration in commodity prices would increase fiscal and currency pressures in the commodity-exporting economies, and could potentially undermine the sustainability of their government finance.
The report also highlights the negative impact of severe weather-related shocks from El Ni?o, which have adversely affected agricultural output and sharply increased food prices in parts of Africa, Asia and Latin America and the Caribbean. Of particular concern is the potential impact on poverty, as losses in the agricultural sector and high food prices tend to have a disproportionately large impact on the poor. Concerted policy measures are needed to ensure that damages wrought by such shocks do not undermine national and global efforts to ¡°end poverty in all its forms¡±.
Many developing economies ¨C especially commodity-dependent economies with large current-account deficits or high levels of external debt ¨C continue to face the risks of heightened capital flow volatility. The reduced and more volatile capital flows, including falling foreign direct investment, to Africa, Latin America and the economies in transition, can further undermine the growth prospects in these regions.
The world economy cannot grow without necessary increases in investment rates, which has shown renewed signs of weaknesses in many large economies. The level of investment needed to achieve the Sustainable Development Goals remains worryingly inadequate in this environment of weak global growth.
GDP growth in the least developed countries is projected to fall well short of the Sustainable Development Goal target of ¡°at least 7 per cent GDP growth¡± in both 2016 and 2017. This may put at risk the much-needed public investment on education, health and climate change adaptation, as well as progress in poverty reduction. At the same time, widespread global unemployment and job insecurity pose a significant challenge to global efforts to promote ¡°inclusive and sustainable economic growth, employment and decent work for all¡±.
The report underscores the need for a more balanced policy mix to rejuvenate global growth and create an enabling environment to achieve the 2030 Agenda for Sustainable Development. The developed economies have relied far too long on a single strand of macroeconomic policy, and it is clear that further monetary stimulus on its own will not lift growth. A more robust fiscal stance, especially if coordinated among the largest economies, could provide a much needed impetus to the global economy.
In many developing and transition economies, Governments should aim to effectively exploit available fiscal space, as well as broaden the tax base, strengthen tax administration and increase compliance, in order to maximize fiscal space and finance public investment programmes.
The report makes clear that there is no room for complacency if we are to realize a world where every country enjoys sustained, inclusive and sustainable economic growth and decent work for all. The report also demonstrates that pro-active policy can produce results. For example, global energy-related carbon emissions remained flat in 2015, while renewable energy investment reached a new record, and this is largely down to strong policy support and initiatives. The challenges that face us are large, but not insurmountable, especially if we confront them with a collective resolve.
Given the prolonged and entrenched economic challenges, rapid implementation of the Addis Ababa Action Agenda becomes increasingly crucial in order to mobilize more resources to boost public and private investments and finance sustainable development so that no one is left behind.
Thank you.
Thank you joining us for an update on the state of the world economy, as of mid-2016. The report presented today revises forecasts from the UN flagship publication World Economic Situation and Prospects 2016, which was released in January.
Our update paints a worrying picture of the world economy. Weak global growth continues to linger, with little prospect for a turnaround this year. The world economy is expected to grow by just 2.4 per cent ¨C the same low rate as in 2015. For next year, the global economy is projected to expand by 2.8 per cent, marking a very modest improvement and possibly reflecting the downturn bottoming out in Brazil and the Russian Federation. A sign of a broad-based revival of global growth remains elusive. As we embark on implementation of the 2030 Agenda for Sustainable Development, the bleak state of the world economy clearly poses significant challenges.
Forecasts for many countries in Africa, the Commonwealth of Independent States and Latin America have been revised downward over the past few months. Commodity-exporters, in particular, have suffered from a sharp drop in export revenue, mounting fiscal and current account shortfalls, and exchange rate pressures, with their challenges compounded by a tightening of macroeconomic policy stances.
While commodity prices have largely stabilised, they are expected to remain at low levels for the next two years. The report underscores that a further deterioration in commodity prices would increase fiscal and currency pressures in the commodity-exporting economies, and could potentially undermine the sustainability of their government finance.
The report also highlights the negative impact of severe weather-related shocks from El Ni?o, which have adversely affected agricultural output and sharply increased food prices in parts of Africa, Asia and Latin America and the Caribbean. Of particular concern is the potential impact on poverty, as losses in the agricultural sector and high food prices tend to have a disproportionately large impact on the poor. Concerted policy measures are needed to ensure that damages wrought by such shocks do not undermine national and global efforts to ¡°end poverty in all its forms¡±.
Many developing economies ¨C especially commodity-dependent economies with large current-account deficits or high levels of external debt ¨C continue to face the risks of heightened capital flow volatility. The reduced and more volatile capital flows, including falling foreign direct investment, to Africa, Latin America and the economies in transition, can further undermine the growth prospects in these regions.
The world economy cannot grow without necessary increases in investment rates, which has shown renewed signs of weaknesses in many large economies. The level of investment needed to achieve the Sustainable Development Goals remains worryingly inadequate in this environment of weak global growth.
GDP growth in the least developed countries is projected to fall well short of the Sustainable Development Goal target of ¡°at least 7 per cent GDP growth¡± in both 2016 and 2017. This may put at risk the much-needed public investment on education, health and climate change adaptation, as well as progress in poverty reduction. At the same time, widespread global unemployment and job insecurity pose a significant challenge to global efforts to promote ¡°inclusive and sustainable economic growth, employment and decent work for all¡±.
The report underscores the need for a more balanced policy mix to rejuvenate global growth and create an enabling environment to achieve the 2030 Agenda for Sustainable Development. The developed economies have relied far too long on a single strand of macroeconomic policy, and it is clear that further monetary stimulus on its own will not lift growth. A more robust fiscal stance, especially if coordinated among the largest economies, could provide a much needed impetus to the global economy.
In many developing and transition economies, Governments should aim to effectively exploit available fiscal space, as well as broaden the tax base, strengthen tax administration and increase compliance, in order to maximize fiscal space and finance public investment programmes.
The report makes clear that there is no room for complacency if we are to realize a world where every country enjoys sustained, inclusive and sustainable economic growth and decent work for all. The report also demonstrates that pro-active policy can produce results. For example, global energy-related carbon emissions remained flat in 2015, while renewable energy investment reached a new record, and this is largely down to strong policy support and initiatives. The challenges that face us are large, but not insurmountable, especially if we confront them with a collective resolve.
Given the prolonged and entrenched economic challenges, rapid implementation of the Addis Ababa Action Agenda becomes increasingly crucial in order to mobilize more resources to boost public and private investments and finance sustainable development so that no one is left behind.
Thank you.
File date:
Thursday, May 12, 2016