UN predicted slowdown in global economy

The United Nations (UN) predicted that global economic growth would decline to 1.9 percent in 2023 due to the food and power crisis caused by the Russia-Ukraine War, the continued impact of Kovid-19, and persistent high inflation. This rate is the last…

The United Nations (UN) announced the World Economic Situation and Prospects 2023 report.

According to the report, the world economy faced a series of shocks in 2022, such as the continuing effects of the Kovid-19 outbreak and the power and food crisis triggered by the Russia-Ukraine War.

While high inflation has led to a decline in real incomes and an increase in the cost of living, many countries have seen climate events such as forest fires and floods, resulting in economic damage and humanitarian problems.

According to the report, the rapid rate hikes by the US Federal Reserve (Fed) triggered capital outflows and exchange rate losses in developing countries.

Growth prospects are uncertain

Rising interest rates and declining purchasing power have weakened consumer confidence and investor sentiment, making near-term growth prospects for the world economy even more uncertain.

Global trade has softened amid reduced demand for consumer goods, the protracted war in Ukraine, and ongoing supply chain issues.

According to the report, in this context, the UN’s global economic growth estimation, which was 3 percent in 2022, was determined as 1.9 percent for 2023. This rate was recorded as the lowest growth estimation in recent years.

The report projected that if some macroeconomic setbacks begin to subside, global economic growth will rise to 2.7 percent in 2024.

On the other hand, it was noted in the report that inflationary pressures will gradually decrease with the weakening of total demand in the global economy, and that the short-term economic outlook remains uncertain due to the persistence of many economic, financial, geopolitical and environmental risks.

Recession risk in most advanced economies

According to the report, the current global economic slowdown affects both developed and developing countries, with many at risk of recession in 2023. The growth momentum in the USA, European Union (EU) and other developed economies weakens, negatively affecting the rest of the world economy.

Growth in the USA, which is assumed to be 1.8 percent in 2022, is expected to be only 0.4 percent in 2023. The EU’s growth claim, which was 3.3 percent in 2022, was also reduced to 0.2 percent for 2023.

It was assumed that the economic growth in China would rise to 4.8 percent this year, after the government abandoned the zero-Kovid-19 policy and started to relax its monetary and fiscal policies. The UK economy is expected to contract by 0.8 percent in 2023.

Inflation will decrease in Turkey

In the report, it was emphasized that the thoughts experienced in the supply of food, especially grain artifacts, with the Russia-Ukraine War were alleviated with the resumption of grain shipments from the Black Sea ports with the initiative of Turkey and the UN.

The UN report claimed that after expanding 5.4 percent last year, Turkey’s economy will grow by 3.7 percent this year and 3.5 percent in 2024.

In addition, it was claimed that the inflation rate in Turkey will decrease to 42.4 percent on average at the end of this year and will decrease to 13.5 percent in the next year by accelerating its decline.