The United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) has recently released World Economic Situation and Prospects (WESP) 2016 report. The report highlights that the world economy stumbled in 2015 and only a modest improvement is projected for 2016/17.
Highlights of the Report
1. Global growth is estimated at a mere 2.4% in 2015, marking a downward revision by 0.4% points from the UN forecasts presented in 2015.
2. The world economy is projected to grow by 2.9% in 2016 and 3.2% in 2017, supported by generally less restrictive fiscal and still accommodative monetary policy stances worldwide.
3. The large capital outflows and increased financial market volatility, growth in developing and transition economies has slowed to its weakest pace since the 2008 global financial crisis.
4. Given the much anticipated slowdown in China and in other large emerging economies notably the Russian Federation and Brazil, the pivot of global growth is partially shifting again towards developed economies in 2016.
5. In 2016 and 2017, South Asia region is expected to be the world's fastest-growing region despite challenging global conditions.
6. GDP growth in the least developed countries is expected to rebound from 4.5% in 2015 to 5.6% growth in 2016, but will fall short of the Sustainable Development Goal target of at least 7% GDP growth per annum in the near term.
7. It indicates that the challenges for policymakers around the globe are likely to intensify in the short run in view of the weaknesses in the world economy.
8. It also shares some positive recent trends in environmental sustainability. Global energy related carbon emissions experienced no growth in 2014 for the 1st time in 20 years.
9. The broad slowdown in economic growth in many developing economies and generally weak wage growth will restrain progress in poverty reduction in the near term.
10. The terms-of-trade of commodity exporters have deteriorated significantly, limiting their ability to demand goods and services from the rest of the world.
Major headwinds for global economy
The WESP 2016 report identifies 5 major headwinds for the Global Economy. These are:
1. Persistent macroeconomic uncertainties
2. Low commodity prices and diminished trade flows
3. Rising volatility in exchange rates and capital flows
4. Stagnant investment and productivity growth
5. Continued disconnect between finance and real sector activities
India and WESP 2016
India will be the fastest growing big economy in the world in 2016. The report has projected India's growth rate at 7.3% in the year 2016 and 7.5% in 2017, which is slightly up from an earlier estimated 7.2% rate in 2015.
About United Nations World Economic Situation and Prospects (WESP) report
WESP report is published annually at the beginning of the year jointly by the UN Department of Economic and Social Affairs (UN/DESA), the UN Conference on Trade and Development (UNCTAD), the 5 UN regional commissions and the World Tourism Organization (UNWTO).