São Paulo – The United Nations Organization (UN) made available this Tuesday (17), in New York, the report World Economic Situation and Prospects 2017 (WESP). According to the organization, global economy expanded 2.2% in 2016, the lowest growth rate since 2009. For this year, the forecast calls for a 2.7% expansion. In 2018, global Gross Domestic Product (GDP) should grow 2.9%. According to the UN, forecasts were revised down slightly in comparison to the ones released on May of last year.
The organization expects a modest recovery, with weak investments and global trade and dwindling productivity growth. The improvements expected for the global economy in 2017 and 2018 means more stability than sustained growth.
According to the UN, developing nations continue to be the ones driving up global growth, accounting for around 60%, especially East and South Asia, but developed economies should register a slight improve this year.
The report blames the extended period of weak investments as the main reason for the slow global growth. For the UN, investments in areas such as research and development, education and infrastructure, can help unlock the performance of global economy.
In regards to environmental sustainability, the organization points out that global level of carbon emissions remained stable for two years, which is a positive. This indicates a higher use of renewable energy sources, but also weak economic growth in important countries. The reports points out that investments in renewable energies in 2015 were stronger in developing nations than in developed ones.
Latin America
Regarding Latin America, the UN expects a return to growth in 2017, after two years of recession. The forecast calls for a 1.3% growth this year and of 2.1% next year. In 2016, there was a decline of 1%. A boost in external demand, an increase in commodity prices and a loosening of monetary policy in South America, combined with lower inflation rates, are pointed as possible causes for the expected recovery.
In South America, the UN expects a growth rate of 0.9% in 2017 and of 2% in 2018, against a decline of 2.3% in 2016, based on the expectations that the region’s two largest economies – Argentina and Brazil – should emerge from their recessions.
The forecast for Brazil, however, points to a limited recovery, since the country continues to present rising unemployment, high indebtedness levels and ongoing fiscal adjustment policies, which inhibit local demand.
Among the risks to the performance of the Latin American economy, the UN mentions a lower growth rate than expected in China, the possible adoption of protectionist measures by the United States new administration and more turbulence in the financial market due to faster-than-expected increases in US’s interest rates.
For the UN, an extended period of weak growth in the region could compromise the social gains achieved in the last decade and impair the search to fulfill the Sustainable Development Goals, the agenda of targets proposed by the UN itself to be achieved until 2030.
*Translated by Sérgio Kakitani
