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Economy

Global economic recovery remains precarious, rebound of 4.7 pct to barely offset 2020 losses: UN report(2)

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2021-01-26 10:48:11Xinhua Editor : Li Yan ECNS App Download

Massive and timely stimulus measures, amounting to 12.7 trillion U.S. dollars, prevented a total collapse of the world economy and averted a Great Depression. However, stark disparity in the size of the stimulus packages rolled out by developed and developing countries will put them on different trajectories of recovery, highlights the report.

The stimulus spending per capita by the developed countries has been nearly 580 times higher than that of the least developed countries (LDCs) although the average per capita income of the developed countries has been only 30 times higher than that of the LDCs. The drastic disparity underscores the need for greater international solidarity and support, including debt relief, for the most vulnerable group of countries.

Moreover, financing these stimulus packages entailed the largest peacetime borrowing, increasing public debt globally by 15 percent. This massive rise in debt will unduly burden future generations unless a significant part is channeled into productive and sustainable investment, and to stimulate growth.

According to the report, global trade shrank by an estimated 7.6 percent in 2020 against the backdrop of massive disruptions in global supply chains and tourism flows. Lingering trade tensions between major economies and stalemates in multilateral trade negotiations were already constraining global trade before the pandemic.

"The current crisis reiterates the importance to revitalize the rule-based multilateral trading system to put the world economy on the trajectory of a robust and resilient recovery," said the UN undersecretary-general for economic and social affairs, Liu Zhenmin. "We must make global trade resilient to shocks to ensure trade remains the engine of growth for the developing countries."

The report highlights opportunities for developing countries if they can prioritize investments that advance human development, embrace innovation and technology, and strengthen infrastructure, including creating resilient supply chains.

Stressing the importance of stimulating investments, the report shows that while the majority of the stimulus spending went into protecting jobs and supporting current consumption, it also fueled asset price bubbles worldwide, with stock market indices reaching new highs during the past several months.

"The depth and severity of the unprecedented crisis foreshadows a slow and painful recovery," said UN Chief Economist and Assistant Secretary-General for Economic Development Elliott Harris. "As we step into a long recovery phase with the roll out of the vaccines against COVID-19, we need to start boosting longer-term investments that chart the path toward a more resilient recovery -- accompanied by a fiscal stance that avoids premature austerity and a redefined debt sustainability framework, universal social protection schemes, and an accelerated transition to the green economy."

An unprecedented crisis -- one that has killed more than 2 million people, uprooted many more lives, forced families into poverty, exacerbated income and wealth inequality between communities, disrupted international trade and paralyzed the global economy -- needs an extraordinary response.

Ultimately, the report underscores the importance of achieving the Sustainable Development Goals -- the blueprint for a fair, peaceful and resilient world.

"Promoting inclusive and equitable growth, reducing inequality and enhancing environmental sustainability is the best plan we have to recover from this crisis and safeguard the world against future crises. Building resilience must guide every aspect of the recovery and we will find women playing critical roles as champions of resilience," added Maria-Francesca Spatolisano, UN assistant secretary-general for policy coordination and inter-agency affairs in the DESA.

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