The UN Report World Economic Situation and Prospects 2019 discusses various challenges before the global economy. The important of them are:
- The global trade growth moderated at 3.8 per cent in 2018 against the growth rate of 5.3 per cent in 2017.
- The stimulus measures and direct subsidies have offset much of the direct economic impacts on China and the United States.
- But if these trade tensions continue for a prolonged period of time it may severely disrupt the global economy.
- The spill over effects of this trade tensions would spread through global value chains, particularly in East Asia.
Tightening fiscal conditions
- Tightening fiscal conditions would result in a rapid rise in interest rates.
- On the other hand, the strengthening of the US dollar could exacerbate emerging market fragilities, leading to a heightened risk of debt distress.
- These risks can be further aggravated by global trade tensions, monetary policy adjustment in developed economies, commodity price shocks, or domestic political or economic disruptions.
- The countries with a substantial amount of dollar-denominated debt, high current account or fiscal deficits, large external financing needs and limited policy buffers are more vulnerable to stress due to tightening fiscal conditions.
- The climate change risks necessitate a fundamental shift in the way the world powers economic strategies.
- Integrating the economic decision making with negative climate risks associated with emissions would be imperative.
- The tools for achieving the integration would be carbon pricing measures, energy efficiency regulations such as minimum performance standards and building codes, and reduction of socially inefficient fossil fuel subsidy regimes.
Challenges in attaining SDG:
The United Nations report World Economic Situation and Prospects 2019 discusses various challenges in attaining the sustainable development goals. The challenges listed are:
- Economic growth is uneven and is failing to reach where it is most needed. Per capita incomes would stagnate or grow only marginally in 2019 in several parts of Africa, Western Asia, Latin America and the Caribbean.
- Even where the per capita growth is strong, economic activity is driven by core industrial and urban regions, leaving peripheral and rural areas behind.
- The report notes that eradicating poverty by 2030 will require both double-digit growth in Africa and steep reductions in income inequality. This seems a distant possibility in the current scenario.
- The confluence of risks is clouding and it may severely disrupt economic activity and inflict significant damage on longer-term development prospects.
- The various risks include escalation of trade policy disputes; financial instabilities linked to elevated levels of debt; and rising climate risks, as the world experiences an increasing number of extreme weather events.
The report notes that the simultaneous appearance of several important risks endangers efforts to achieve the 2030 Agenda for Sustainable Development containing 17 specific goals to promote prosperity and social well-being while protecting the environment.