The development of the global economy is slowing down. According to UN experts, this year economic growth will be 2.7 percent, while in the previous global GDP grew by 3 percent. The main factors of this situation are the aggravation of the “trade wars”, the extreme political uncertainty and the decline in trust from the business community.
According to the UN report on the state of the world economy and its development prospects, a slowdown occurs in all major developed countries and in most developing countries, both due to external and internal factors.
In addition to exacerbating trade disputes and political instability, serious risks to economic development are the rapid deterioration of the financial situation and the increasingly obvious effects of climate change.
The UN warns that a sharper or longer slowdown in economic growth will call into question the prospects for the implementation of the Sustainable Development Agenda - 17 goals to eradicate poverty, achieve social well-being and protect the environment. A weak economy can result in reduced investment in areas such as education, health, climate change adaptation, and advanced infrastructure.
According to the UN chief economist and assistant secretary-general for economic development, Elliot Harris, we cannot rely solely on economic development. “It’s increasingly clear that policies to promote sustainable development will have to go beyond the problem of GDP growth and identify new, more effective measures of economic activity that adequately reflect the costs associated with inequality, insecurity and climate change,” said Harris, introducing on Tuesday new forecast.
Regarding the effects of climate change, he stressed the urgent need to abandon the use of fossil fuels and introduce carbon pricing. According to UN economists, the monetization of CO2 emissions will force governments to take into account the environmental costs associated with production and consumption.
As for the post-Soviet countries, adverse external conditions, such as a reduction in demand from the most economically developed countries and a decline in commodity prices will adversely affect economic growth rates. According to the latest projections, if in 2018 in the CIS countries and in Georgia the GDP per capita was 2.7 percent, then this year it will fall to 1.9 percent. True, UN economists predict that in 2020 it will reach 2.3 percent.
GDP growth in Russia in 2018, exceeding expectations, was estimated at 2.3 percent. However, UN economists believe that it will not be possible to maintain the same pace this year. The projections are for growth of only 1.4 percent. According to the study, the increase in the value added tax increased inflationary pressure, which, in turn, led to a decrease in consumer demand and did not allow for a softening of monetary policy. Other negative factors include a low level of business lending and investment and the threat of new sanctions as a result of geopolitical tensions.
As for other exporters of fossil fuels, Azerbaijan will benefit from an increase in gas exports, and the economy of Kazakhstan will grow due to budget spending.
In Ukraine, importing oil and gas is expected to weaken economic growth. The reasons for this are low targets for steel, the likelihood of a reduction in the volume of transit of Russian gas and the huge foreign debt that must be paid by 2020.
In Belarus, an increase in prices for oil supplies can negatively affect economic activity. Other countries in the region that showed high growth last year will not be able to keep it at the same level. True, it is expected that in Central Asian countries the economic growth rate will be higher than the average for the CIS.