International efforts to tackle global climate change and increased poverty around the world could be derailed because of the risks of a sharp slowdown of the global economy in 2020, warned the United Nations.
This was said by the premier global body in its flagship report before the annual gathering of world leaders in Davos next week. The report singled out the trade tensions between major countries to be the primary threat to the advancement of the global economy and for potentially inflicting long term impact for sustainable development.
The growth of the global economy in 2019 was its slowest in a decade thanks to the impact of the tit-for-tat tariffs imposed by the United States and China as a part of their trade war, the UN report noted. The recovery of the global economy could be derailed in 2020 if there a renewed flareup in the trade tensions or financial turmoil, or an escalation of geopolitical tensions.
This warning was issued even as the US and China signed a partial trade agreement to bring a pause in the trade war between the two largest economies of the world on Tuesday.
While conceding that the temporary truce and hold up in the trade war between the two countries should be helpful propelling growth of the global economy in 2020 to about 2.5 per cent compared to the 2.33 per cent clocked in 2019 which was the slowest in a decade, the UN report warned of high risks of a possible relapse of the global economy.
The report added that the global GDP growth could slump as low as 1.8 per cent if the countries failed to put a check on the risk. That slump will have serious consequences for governments in in their effort to meet their sustainable development goals.
“These risks could inflict severe and long-lasting damage on development prospects. They also threaten to encourage a further rise in inward-looking policies, at a point when global cooperation is paramount,” said AntónioGuterres, secretary-general of the UN.
The UN predicted that the economic growth rate for the United States would slow down in 2020 to about 1.7 per cent compared to the 2.2 per cent in 2019 which could be crucial for the US president Donald Trump as he seeks reelection this year. The report pointed out the main causes of the drag on the largest economy of the world for the current year will be the waning down of the impact of the tax cuts that were introduced by Trump earlier in his presidency as well as a low confidence of businesses after the nearly two year long trade war with China.
The report also pointed out a slight drop in the growth of the Chinese economy for 2020 at 6 per cent from the 6.1 per cent that it reported in 2019 which would a continuation of a gradual slowdown in the second largest economy of the world after decades of fast growth.
The report also predicts relatively weak economic growth compared to recent years for the European Union against a backdrop of continued global uncertainty over trade. The UN expects growth tin EU to increase slightly to 1.6 per cent in 2020 compared to the 1.4 per cent last year amid weaker levels of manufacturing output.
(Adapted from TheGuardian.com)