A new United Nations (UN) economic report is forecasting growth for Barbados at 7.5 per cent this year and 3.3 per cent in 2023.
However, Chief of Global Economic Monitoring at the UN Department of Economic and Social Affairs (DESA) Hamid Rashid is warning of a bumpy, if not perilous, road ahead for countries across the globe.
Rashid was addressing a media briefing on Thursday as he joined UN Under-Secretary-General Liu Zhenmin in launching the UN World Economic Situation and Prospects 2022.
The report, which places Barbados as a high-income economy based on per capita gross national income, estimated that the economy grew by 1.5 per cent last year.
Indicating that global economic growth was estimated around 5.5 per cent last year, after a decline of 3.4 per cent in 2020, Rashid said: “The world economy is certainly in a very difficult spot and the road is bumpy, if not what I would say perilous. We have significant challenges.”
He explained that while there was some rebound in economic activity last year due to pent up demand and higher consumer spending, that should be seen as the “glass half empty” since it was playing catch up after the more than three per cent decline a year prior.
Rashid said there were some “interconnected challenges or headwinds” ahead for the global economy – the spread of the highly transmissible Omicron variant of the COVID-19 virus, lingering market disruptions, supply chain challenges and rising inflation in both developed and developing economies.
“That is, to some extent, holding back full recovery of the global economy,” he said.
The DESA official said the global economic outlook was “cloudy” at best, with growth estimated to be a modest four per cent this year and 3.5 per cent in 2023, contingent on an ease in supply chain disruptions, lower inflation, equitable distribution of COVID-19 vaccinations across countries and regions, an ease in COVID-19 cases, and “no surprises in monetary policies” in developed countries.
He said there continued to be worrying trends of high extreme poverty rates, unemployment, lower income levels, and unequal access to COVID-19 vaccines that must be addressed.
According to the 232-page UN report, an estimated 64 million more people could live in extreme poverty in 2022, when compared to 2019 estimates.
Rashid said the situation was even more worrying for developing countries, adding that the pandemic had reversed poverty reduction trends, which was estimated at 812 million people globally in extreme poverty in 2019, compared to an estimated 897 million in 2020 when the pandemic struck, and 889 million last year.
He expressed concern about the loss of jobs in developing countries, which he said was especially impacting women and youth, even as commodity prices continued to rise, threatening food security.
“Some of the developing countries are doing better than others, especially commodity exporters, due to some pick up in commodity prices. On the other hand, some of the tourism-dependent countries are still hurting very much because tourism hasn’t picked up as yet,” said Rashid.
He also expressed concern about a widening income gap between rich and poor countries, explaining that while GDP per capita in developed countries was expected to fully recover next year, the GDP per capita in developing countries was expected to remain “below levels projected before the pandemic”.
The macroeconomic policy advisor said the current situation called for proactive fiscal policies, better public debt management, job creation, social protection, better use of technology and ramped up support for low-income countries from the international community.
“Fiscal space is limited for many countries and on top of that, many of them are facing high levels of debt, and the rising cost of public debt is [posing] a lot of challenges for them. We have to strengthen international cooperation for low- and middle-income countries, especially in terms of debt relief and debt restructuring,” said Rashid.
“We have a situation where many of the developing countries need significant fiscal support but they cannot do it because of this debt overhanging, debt burden that they are facing, and that is where the international cooperation must play an important role to provide meaningful debt restructuring and debt relief to stimulate the recovery and sustain the recovery in the near term,” he said.
The UN report predicts that, collectively, the Caribbean economy would expand 11.5 per cent this year and 3.7 per cent next year. It estimated growth of 3.2 per cent for the Caribbean last year.
Zhenmin cautioned that the global economy was still “in a time of great uncertainty” with no immediate end in sight to the COVID-19 pandemic.
He said the economic and social challenges facing the world could slow the pace or reverse progress countries made towards achieving the UN 2030 Sustainable Development Goals (SDGs).
The senior UN official said in addition to the need for lower inflation rates, sound fiscal policies, job creation, higher investments, continued social protection and equity in COVID-19 vaccination, countries should continue to work towards reducing their carbon dioxide emissions.
“We are at a critical juncture in human history today. Decisions we make and actions we take today will profoundly affect future generations and shift our common destiny. So, let us turn this crisis into opportunity,” he said.
marlonmadden@barbadostoday.bb
