UNITED NATIONS (AP) — The global economy recorded its lowest growth of the decade in 2019, falling to 2.3% as a result of protracted trade disputes and a slowdown in domestic investment, the United Nations said Thursday.
The U.N.'s annual report, the World Economic Situation and Prospects 2020, forecast a modest acceleration in global growth, reaching 2.5% in 2020 and 2.7% in 2021.
But the U.N. also cautioned that a flareup of trade tensions, financial turmoil or an escalation of geopolitical tensions could derail a recovery, slowing growth to just 1.8% this year.
The report warned that slower world growth “threatens to undermine progress towards eradicating poverty, raising living standards, and creating a sufficient number of decent jobs.”
The economic growth projections for the next two years are well below rises of 3.2% in 2017 and 3% in 2018. A year ago, the U.N. forecast that the global economy would grow about 3% in both 2019 and 2020.
The latest U.N. report said 2019 ended up having the slowest global economic expansion since the world financial crisis in 2008-2009, with growth trending down in virtually all major economies and slowing in all geographic areas except Africa.
“This slowdown is occurring alongside growing discontent with the social and environmental quality of economic growth, amid pervasive inequalities and the deepening climate crisis,” it said.
The U.N. said the broad-based slowdown “has been accompanied by a sharp slowdown in international trade flows and global manufacturing activity.”
“Amid rising tariffs and rapid shifts in trade policies, business confidence has deteriorated, dampening investment growth across most regions,” it said.
In addition, the report said, softening demand has also affected global commodity prices, particularly oil and industrial metals.
“A significant number of countries are still suffering from the effects of the 2014-2016 commodity price downturn, which has resulted in persistent output losses and setbacks in poverty reduction,” the U.N. said.
The 236-page report was produced by the U.N. Department of Economic and Social Affairs, the U.N. Conference on Trade and Development and the U.N.'s five regional economic commissions.
Secretary-General Antonio Guterres singled out the report’s warning “that economic risks remain strong, aggravated by deepening political polarization and increasing skepticism about the benefits of multilateralism.”
“These risks could inflict severe and long-lasting damage on development prospects,” the U.N. chief warned in the forward to the report. “They also threaten to encourage a further rise in inward-looking policies, at a point when global cooperation is paramount.”
The report said that in the United States, the world’s largest economy, GDP growth of 2.9% in 2018 slowed to 2.2% in 2019 and is projected to fall further to 1.7% in 2020 with a slight increase to 1.8% in 2021.
The U.N. said recent U.S. cuts in the federal funds rate may promote some economic activity, but “continued policy uncertainty, weak business confidence and slowing job growth are likely to weigh on domestic demand.”
Despite “significant headwinds,” the U.N. said East Asia remains the world’s fastest growing region and largest contributor to global growth. GDP in the region is projected to gradually slow from 6.1% in 2019 to 6% in 2020 and 5.9% in 2021.
In China, the world’s second largest economy and the region’s powerhouse, the economy grew 6.6% in 2018 then slowed to 6.1% in 2019 and is projected to slip further to 6% in 2020 and 5.9% in 2021, the U.N. said.
Growth in other large emerging economies including Brazil, India, Mexico, Russia and Turkey “is expected to gain some momentum in 2020,” the U.N. said.
The report said manufacturing in the European Union will continue to be held back by global uncertainty, but this will be partially offset by steady growth in private consumption. This will allow a modest rise in GDP in the EU from 1.4% in 2019 to a projected 1.6% in 2020 and 1.7% in 2021.
The economic outlook for Africa, western Asia, Latin America and the Caribbean, and economies in transition “is clouded by relatively low commodity prices and protracted weaknesses in some large countries,” the report said.
Average real incomes in one-third of commodity-dependent developing countries, which are home to 870 million people, are lower today than they were in 2014, it said. This includes several large countries including Angola, Argentina, Brazil, Nigeria, Saudi Arabia and South Africa.
Nonetheless, the U.N. said, GDP growth in Africa rose from 2.7% in 2018 to 2.9% last year and is projected to reach 3.2% in 2020 and 3.5% in 2021.
Twenty-five African countries are projected to achieve economic growth of at least 5% this year: Egypt, Congo, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Rwanda, South Sudan, Uganda, Tanzania, Chad, Benin, Burkina Faso, Ivory Coast, Gambia, Ghana, Guinea, Mali, Niger, Senegal, Sierra Leone, Togo, Malawi and Moszambique.