*The United Nations’ 2022 World Economic Situation and Prospects (WESP) report released January 13 discusses the strategic importance of a coordinated, sustained global approach to containing COVID-19, including universal access to vaccines as ‘the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the world economy’

Isola Moses | ConsumerConnect

As the global world makes efforts at advancing economic development, the United Nations (UN) key report on the overall economy released Thursday, January 13, 2022, indicates that the rapid spread of the Omicron COVID-19 variant has put the brakes on a rapid recovery, counteracting signs of solid growth at the end of last year.

ConsumerConnect gathered the 2022 World Economic Situation and Prospects (WESP) report, produced by the UN Department of Economic and Social Affairs (DESA), cites a cocktail of problems that are slowing down the economy.

Accordng to the report, these challenges include the new waves of COVID-19 infections, persistent labour market, and lingering supply-chain difficulties, and rising inflationary pressures.

The UN stated: “The slowdown is expected to carry on into next year. After an encouraging expansion of 5.5 per cent in 2021 — driven by strong consumer spending and some uptake in investment, with trade in goods surpassing pre-pandemic levels — global output is projected to grow by only 4.0 percent in 2022 and 3.5 percent in 2023.

‘Close the inequality gap’

António Guterres, UN Secretary-General, in his comments on launch of the 2022 World Economic Situation and Prospects report, declared that, with WESP calling for better targeted and coordinated policy and financial measures, it is time to close the inequality gaps within and among countries.

Guterres stated: “If we work in solidarity – as one human family – we can make 2022 a true year of recovery for people and economies alike.”

As regards what economies need to do in overcoming some of these economic development problems, Liu Zhenmin, Under-Secretary-General of the UN Department of Economic and Social Affairs, drew attention to the importance of a coordinated, sustained global approach to containing COVID-19 that includes universal access to vaccines.

Global trade

Zhenmin, however, warned that, without it, “the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the world economy.”

Between wealthier economies and developing countries

In the same vein, the UN 2022 WESP report predicts that developing countries will take a greater long-term hit that wealthier countries.

The global bosy said: “Africa and Latin America and the Caribbean are projected to see significantly lower growth, compared to pre-pandemic projections, leading to more poverty and less progress on sustainable development and climate action.

“The number of people living in extreme poverty is projected to remain well-above pre-pandemic levels, with poverty projected to increase further in the most vulnerable economies: in Africa, the absolute number of people living in poverty is projected to rise through 2023.

“In contrast, the economies of richer countries are expected to almost fully recover by next year.”

Safety nets

The special financial measures put in place by many governments since the pandemic – such as bailouts, improved social protection and job support – should, says the report, stay in place to ensure a strong recovery.

Role of Central Banks

In light of rising global inflation, however, several Central Banks have begun to unwind their extraordinary monetary response to the crisis.

Several low-income developing countries, are facing unsustainable external debt burdens, amid sharp interest rate rises.

Central Banks

According to the report, additional borrowing during the pandemic and increasing debt-servicing costs, have put many of them on the verge of a debt crisis.

These countries are in urgent need of further and coordinated international support for debt relief, it noted.

Jobs, slow to re-appear

The report further said the employment levels are projected to remain well-below pre-pandemic levels during the next two years, and possibly beyond.

Labour force participation in the United States (US) and Europe remain at historically low levels, as many who lost jobs or left the labour market during the pandemic, have not yet returned.

These shortages in developed economies are adding to other pressures, such as inflation, and supply-chain challenges.

Simultaneously, employment growth in developing countries remains weak, amid lower vaccination progress and limited stimulus spending, the report said.

Africa, Latin America and the Caribbean, and Western Asia, are projected to see a slow recovery of jobs.

In many countries, the pace of job creation is not enough to offset the earlier employment losses.

The WESP was released two days after the latest World Bank’s Global Economic Prospects report, which drew similar conclusions, predicting that, given the rapid spread of the Omicron variant, the COVID-19 pandemic will continue to disrupt economic activity in the near term.