Tag: World Economic Outlook

IMF Says World Not Heading For 2023 Recession

The International Monetary Fund has given a brighter outlook in its latest report than in October, predicting that inflation will slow. It said that European economies had shown more resilience than expected.

Inflation will likely slow over the next two years, the International Monetary Fund (IMF) said in its world economic outlook report.

The report said: “Global inflation is expected to fall from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024.”

The fund did not expect global GDP to shrink, and IMF chief economist Pierre-Olivier Gourinchas said that “we’re well away from any sort of global recession marker.”

Growth expected to fall

Global economic growth is predicted to fall from 3.4% in 2022 to 2.9% in 2023, and then rise to 3.1% in 2024, the IMF said.

“The rise in central bank rates to fight inflation and Russia’s war in Ukraine continue to weigh on economic activity,” the report said.

“Global conditions have improved as inflation pressures started to abate,” Gourinchas said at a news conference in Singapore. “The road back to a full recovery with sustainable growth, stable prices and progress for all has only started.”

“Economic growth proved surprisingly resilient in the third quarter of last year, with strong labour markets, robust household consumption, and also business investment,” said Gourinchas.

The IMF said that although the spread of COVID-19 in China dampened growth in 2022, “the recent reopening has paved the way for a faster-than-expected recovery.” China lifted most of its COVID-19 restrictions late last year.

The organization noted that the world economy still faces serious risks, including Russia’s war against Ukraine, potential future waves of COVID-19 infection in China and high interest rates leading to crises in countries saddled with considerable debt.

The fund called for the strengthening of debt restructuring frameworks, suggesting it believes some countries are likely to at least struggle to service their debts without preventive measures. 

It also appeared in its report to chide governments for trying to alleviate economic pressures with overly generalized measures that ran the risk of fueling inflation. 

“Fiscal support should be better targeted at those most affected by elevated food and energy prices, and broad-based fiscal relief measures should be withdrawn,” the IMF said.

EU and Russia show resilience; British economy to shrink

The report indicates that Russia’s economy has proven more resilient to sanctions and other fallout from the war in Ukraine than expected. The IMF predicted growth of 0.3% in 2023, compared to a contraction of 2.2% the previous year. In October, the IMF predicted a 2.3% contraction for Russia in 2023.

The IMF predicted that Germany and Italy would avoid recessions this year, with European growth being “more resilient than expected” despite the effects of Moscow’s invasion of Ukraine.

The fund predicted that the UK’s economy will shrink by 0.6% in 2023, compared to growth of 0.3% it had predicted in October. The British economy is being negatively impacted by higher interest rates and tighter government budgets.

“These figures confirm we are not immune to the pressures hitting nearly all advanced economies,” Chancellor of the Exchequer Jeremy Hunt said in response to the IMF forecast. “Short-term challenges should not obscure our long-term prospects – the UK outperformed many forecasts last year, and if we stick to our plan to halve inflation, the UK is still predicted to grow faster than Germany and Japan over the coming years.”

This article was first published on DW.


IMF Cuts India’s FY23 Economic Growth to 6.8%, Says Worst Yet To Come for Global Economy

In its annual World Economic Outlook report released on Tuesday, the IMF said the outlook for India is growth of 6.8% in 2022 – a downgrade by 0.6 percentage points since the July forecast.

New Delhi: The International Monetary Fund (IMF) on Tuesday cut its projection of India’s economic growth for the current fiscal (FY23) by 0.6 percentage points to 6.8% as it joins other agencies that have trimmed forecasts while also warning that the worst is yet to come for the global economy.

The IMF had in July projected a gross domestic product (GDP) growth of 7.4% for India in the fiscal year that started in April 2022. Even that forecast was lower than the 8.2% it projected in January this year.

India had grown at 8.7% in the 2021-22 fiscal year (April 2021 to March 2022), mainly due to a low base effect caused by the COVID-19 lockdown of the 2020-21 fiscal year.

In its annual World Economic Outlook (WEO) report released on Tuesday, the IMF said the outlook for India is growth of 6.8% in 2022 – a downgrade by 0.6 percentage points since the July forecast, reflecting a weaker-than-expected outturn in the second quarter and more subdued external demand.

Global growth is forecast to slow from 6.0% in 2021 to 3.2% in 2022 and 2.7% in 2023. This is the weakest growth profile since 2001, except for the global financial crisis and the acute phase of the COVID-19 pandemic.

The World Bank earlier this month trimmed India’s growth forecast by a full percentage point, trimming it from 7.5% to 6.5%. The Reserve Bank of India in late September cut its growth forecast to 7% from an earlier estimate of 7.2% after raising the benchmark repo rate by 50 basis points to 5.9% as to contain high inflation – seen to remain above 6% until early 2023.

RBI

The Reserve Bank of India seal is pictured on a gate outside the RBI headquarters in Mumbai, India, February 2, 2016. Photo: Reuters/Danish Siddiqui

Report predicts global downturn

The economic growth projections reflect significant slowdowns for the largest economies: a US GDP contraction in the first half of 2022, a euro area contraction in the second half of 2022, and prolonged COVID-19 outbreaks and lockdowns in China with a growing property sector crisis, the IMF said.

“The global economy continues to face steep challenges, shaped by the lingering effects of three powerful forces: the Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China,” said Pierre-Olivier Gourinchas, director of research at IMF, in his forward to the WEO released during the annual meeting of the IMF and the World Bank.

More than a third of the global economy will contract in 2023, while the three largest economies – the United States, the European Union, and China – will continue to stall. “In short, the worst is yet to come, and for many people 2023 will feel like a recession,” he wrote.

Growth rate projections for China is 3.2%, down from 8.1% growth rate in 2021.

In China, the frequent lockdowns under its zero-COVID policy have taken a toll on the economy, especially in the second quarter of 2022. Furthermore, the property sector, representing about one-fifth of economic activity in China, is rapidly weakening.

“Given the size of China’s economy and its importance for global supply chains, this will weigh heavily on global trade and activity,” Gourinchas said.

In the United States, the tightening of monetary and financial conditions will slow growth to 1% next year. In China, the IMF has lowered next year’s growth forecast to 4.4% due to a weakening property sector and continued lockdowns, he wrote in a blog post.

“Russia’s invasion of Ukraine continues to powerfully destabilize the global economy. Beyond the escalating and senseless destruction of lives and livelihoods, it has led to a severe energy crisis in Europe that is sharply increasing costs of living and hampering economic activity,” he said.

Also Read: UN Body Forecasts Slide in India’s GDP to 5.7% in 2022, Calls for ‘Urgent Course Correction’

India doing ‘fairly well’

India’s economy is doing fairly well, but additional monetary tightening is required, Gourinchas said. “India has been doing very well in 2022 and is expected to grow fairly robustly in 2023. We expect a growth rate at 6.8% for this year, and the projection for the country is 6.1% for the next year,” Gourinchas told reporters at a news conference here to release the World Economic Outlook report.

“It’s a downward revision this year, and it’s mostly due to the external outlook as well as tighter financial conditions, and the growth revision for the first quarter of the fiscal year came in weaker than previously expected,” he said.

“Inflation is still above the central bank target in India. We expect India’s inflation at 6.9% in 2022-23, which is likely to come down to 5.1% next year. So, the overall stance of the policy we think that fiscal and monetary policy should be probably on the tightening side,” Gourinchas said.

(With PTI inputs)

COVID-19: Global Economy Could Witness Losses Worth up to $8.8 Trillion

The impact on South Asian gross domestic product is estimated to be to the tune of $142-218 billion.

New Delhi: The global economy is expected to suffer $5.8-8.8 trillion in losses due to the coronavirus pandemic, the Asian Development Bank (ADB) said on Friday.

Of this, the impact on South Asian gross domestic product (GDP) will be to the tune of $142-218 billion.

“The global economy could suffer between USD 5.8 trillion and USD 8.8 trillion in losses – equivalent to 6.4 per cent to 9.7 per cent of the global GDP – as a result of the novel coronavirus disease (COVID-19) pandemic,” ADB said in a new report subsequent to its economic outlook released in early April.

The GDP in South Asia will also be lower by 3.9-6%, mainly reflecting the tight restrictions in place in countries like Bangladesh, India and Pakistan, ADB said in its updated assessment of the Potential Economic Impact of COVID-19.

The Manila-headquartered multi-lateral funding agency said that the economic losses in Asia and the Pacific region could range from $1.7 trillion under a short containment scenario of three months to $2.5 trillion under a long containment scenario of 6 months, with the region accounting for about 30% of the overall decline in global output.

The People’s Republic of China (PRC) could suffer losses between $1.1 trillion and $1.6 trillion.

In the Asian Development Outlook (ADO) 2020 published on April 3, the agency had estimated COVID-19’s global cost to range from $2 trillion to $4.1 trillion.

Earlier on March 6, it had estimated the economic impact globally ranging from $77 billion to $347 billion (0.1 to 0.4% of global GDP).

ADB said its new analysis which expects global impact of $5.8-8.8 trillion is excluding the impact of policy measures.

The agency’s new estimate is more than double the World Bank’s estimate of 2-4 decline in global GDP, and higher than the IMF’s World Economic Outlook estimate of 6.3% decline in global GDP.

Governments around the world have been quick in responding to the impacts of the pandemic, implementing measures such as fiscal and monetary easing, increased health spending and direct support to cover losses in incomes and revenues.

Sustained efforts from governments focused on these measures could soften COVID-19’s economic impact by as much as 30-40%, according to the new report.

“This could reduce global economic losses due to the pandemic to between $4.1 trillion and $5.4 trillion,” ADB added.

The ADB analysis has used a Global Trade Analysis Project-computable general equilibrium model, covering 96 outbreak-affected economies with over 4 million COVID-19 cases.

In addition to shocks to tourism, consumption, investment, and trade and production linkages covered in the ADO 2020 estimates, the new report includes transmission channels such as the increase in trade costs affecting mobility, tourism, and other industries; supply-side disruptions that adversely affect output and investment; and government policy responses that mitigate the effects of COVID-19’s global economic impact.

This new analysis presents a broad picture of the very significant potential economic impact of COVID-19, said ADB chief economist Yasuyuki Sawada.

It also highlights the important role policy interventions can play to help mitigate damage to economies. These findings can provide governments with a relevant policy guide as they develop and implement measures to contain and suppress the pandemic, and lessen its impacts on their economies and people.

ADB said that policy makers should work together to quickly limit the pandemic – the longer the containment period, the more difficult and prolonged the recovery will be.

“Strong income and employment protection are critical to support the most vulnerable and avoid long-term economic scarring,” it said.

By May 12, the virus had spread to 213 countries and territories worldwide, infecting more than 4 million people and causing more than 2,80,000 deaths, ADB said.

On the impact on wage incomes due to the pandemics, ADB expects it to fall globally especially in the US, the EU, and the UK.

“Globally, labour income will drop between $1.2 trillion to $1.8 trillion. For Asia, the decline in wage income will range from $359 billion to $550 billion – or about 30% of the global drop in wage income,” it added.

The report has analysed that the macroeconomic stabilisation packages announced by various countries could raise global GDP by $1.7 trillion to $3.4 trillion (1.9-3.7% of global GDP).

For Asia, the macroeconomic stimulus could also add $339 billion to $675 billion (1.3-2.5% of the region’s GDP).

Coronavirus Pandemic will Unleash Worst Recession Since Great Depression: IMF Chief

While governments have already undertaken fiscal stimulus measures of $8 trillion, more would likely be needed.

Washington: The pandemic sweeping the world will turn global economic growth “sharply negative” in 2020, triggering the worst fallout since the 1930s Great Depression, with only a partial recovery seen in 2021, the head of the International Monetary Fund said.

IMF Managing Director Kristalina Georgieva painted a far bleaker picture of the social and economic impact of the new coronavirus than even a few weeks ago, noting governments had already undertaken fiscal stimulus measures of $8 trillion, but more would likely be needed.

She said the crisis would hit emerging markets and developing countries hardest of all, which would then need hundreds of billions of dollars in foreign aid.

“Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020,” she said on Thursday in remarks prepared for delivery ahead of next week’s IMF and World Bank Spring Meetings.

“Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year.”

If the pandemic faded in the second half of the year, the IMF expected a partial recovery in 2021, Georgieva said, but she warned the situation could also get worse.

Also watch | In Reality, Unemployment Worse than 23%, Rural India Hit Hard: Mahesh Vyas

“I stress there is tremendous uncertainty about the outlook: it could get worse depending on many variable factors, including the duration of the pandemic,” she said.

The IMF, which has 189 member countries, will release its detailed World Economic Outlook forecasts on Tuesday.

The novel coronavirus that emerged in China in December has raced around the globe, infecting 1.41 million people and killing 83,400, according to a Reuters tally.

Georgieva said the pandemic was hitting both rich and poor countries, but many in Africa, Asia and Latin America were at higher risk because they had weaker health systems. They were also unable to implement social distancing in their densely populated cities and poverty-stricken slums.

She said investors had already removed some $100 billion in capital from those economies, more than three times the outflow seen during the same period of the global financial crisis.

With commodity prices down sharply, emerging market and developing countries would need trillions of dollars to fight the pandemic and rescue their economies, she said.

“They urgently need help,” she said, estimating hundreds of billions of dollars would have to be pumped in from outside sources since those governments could only cover a portion of the costs on their own, and many already had high debts.

Georgieva said it was encouraging that all governments had sprung into action, enacting some $8 trillion in fiscal measures and massive monetary measures.

To ensure a future recovery, Georgieva called for continued efforts to contain the virus and support health systems, while averting export controls that could slow the flow of vital medical equipment and food.

“The actions we take now will determine the speed and strength of our recovery,” she said.

It was critical to provide affected people and companies with “large, timely and targeted” measures such as wage subsidies, extended unemployment benefits and adjusted loan terms, while reducing stress to the financial system.

Coordinated fiscal stimulus was critical, and monetary policy should remain accommodative, where inflation remained low.

“Those with greater resources and policy space will need to do more; others, with limited resources will need more support,” she said.

The IMF was created for times like these, and stood ready to deploy its $1 trillion in lending capacity, Georgieva said.

The Fund’s executive board had approved doubling its emergency funding to $100 billion to meet the requests of over 90 countries, and staff were racing to process those requests.

The IMF was also looking at ways to provide additional liquidity support, including through creation of a new short-term liquidity line, and solutions that would allow lending even to countries whose debt was unsustainable, she said.

The IMF was also looking to increase its Catastrophe Relief and Containment Fund, which provides grants for the poorest countries to cover IMF debt service payments, to $1.4 billion from around $200 million, she said.

To further aid the poorest economies, the Fund and the World Bank were urging creditors such as China and other countries to temporarily stop collecting debt payments on their bilateral loans.

(Reuters)

IMF Lowers Global Growth Forecast Citing ‘Negative Surprises’ in India

The fund also revised downwards its forecast for India to 4.8% for 2019.

Davos: The International Monetary Fund (IMF) on Monday lowered growth estimate for the world economy to 2.9% for 2019, citing “negative surprises” in few emerging market economies, especially India.

Providing an update to the World Economic Outlook (WEO) ahead of the inauguration of the World Economic Forum (WEF) annual summit here, the fund also revised downwards its forecast for India to 4.8% for 2019.

Global growth is projected to rise from an estimated 2.9% in 2019 to 3.3% in 2020 and 3.4% for 2021, a downward revision of 0.1 percentage point for 2019 and 2020 and 0.2 for 2021. The reduction is compared to projections made by the IMF in October last year.

“The downward revision primarily reflects negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years. In a few cases, this reassessment also reflects the impact of increased social unrest,” the IMF said.

India-born IMF chief economist Gita Gopinath said growth in India slowed sharply owing to stress in the non-banking financial sector and weak rural income growth.

India’s growth is estimated at 4.8% in 2019, projected to improve to 5.8% in 2020 and 6.5% in 2021 (1.2 and 0.9 percentage point lower than in the October WEO), supported by monetary and fiscal stimulus as well as subdued oil prices, the IMF said. 2019 refers to the fiscal year 2019-20.

Gopinath also said the pickup in global growth for 2020 remains highly uncertain as it relies on improved growth outcomes for stressed economies like Argentina, Iran and Turkey and for under performing emerging and developing economies such as Brazil, India and Mexico.

Also read: What Will India’s New Saffron Curtain Mean for its Economic Growth?

India’s GDP growth in the July-September quarter of 2019 slowed sharply to 4.5%, the weakest pace in more than six years, as manufacturing output hit a slump and consumer demand as well as private investment weakened.

On the positive side, the IMF on Monday said market sentiment has been boosted by tentative signs that manufacturing activity and global trade are bottoming out. Besides, there is a broad-based shift toward accommodative monetary policy, intermittent favourable news on US-China trade negotiations, and diminished fears of a no-deal Brexit, leading to some retreat from the risk-off environment that had set in at the time of the October WEO.

“However, few signs of turning points are yet visible in global macroeconomic data,” it noted.

Growth in China is projected to inch down from an estimated 6.1% in 2019 to 6.0% in 2020 and 5.8% in 2021.

The envisaged partial rollback of past tariffs and pause in additional tariff hikes as part of a ‘Phase One’ trade deal with the US is likely to alleviate near-term cyclical weakness, resulting in a 0.2 percentage point upgrade to the country’s 2020 growth forecast relative to the October WEO, the IMF said.

However, unresolved disputes on broader US-China economic relations and the needed strengthening of the domestic financial regulatory system are expected to weigh, it added.

IMF managing director Kristalina Georgieva said the reality is global growth remains sluggish even as she mentioned that monetary easing has helped to stabilise the global economy, adding roughly 0.5% to global growth.

Also read: Budget 2020: Here Are Five Challenges Nirmala Sitharaman Is Facing

However, she said that a more comprehensive solution would be needed if global growth slows again. “A coordinated fiscal response can boost growth,” she said while calling for a “spirit of cooperation”.

Speaking at a press conference here on the WEO update, Gopinath said that a new international taxation regime is needed for digital economy to check tax evasion.

The world economy has been looking for some bright spots that can offset tighter financial market conditions and uncertainty at a time when trade tensions between the world’s largest economies are affecting economic confidence and momentum.

Gian Maria Milesi Feretti, deputy director, Research Department IMF, was also present.

Effects of Global Slowdown More Pronounced in India: IMF Chief

The global economy is witnessing a “synchronised slowdown” which will result in slower growth for 90% of the world, Kristalina Georgieva said.

Washington The global economy is witnessing a “synchronised slowdown” which will result in slower growth for 90% of the world this year and the effect is even “more pronounced” in some of the largest emerging market economies like India, new IMF chief Kristalina Georgieva has warned.

The managing director of the International Monetary Fund (IMF) pointed out that the widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade.

She said the World Economic Outlook to be released next week will show downward revisions for 2019 and 2020.

“In 2019, we expect slower growth in nearly 90 per cent of the world. The global economy is now in a synchronised slowdown,” Georgieva said on Tuesday in her curtain-raiser speech for the IMF and World Bank’s annual meeting here next week.

The headline numbers reflect a complex situation, she said.

Despite this overall deceleration, close to 40 emerging market and developing economies are forecast to have real GDP growth rates above 5%, including 19 in sub-Saharan Africa, the IMF chief said.

“In the US and Germany, unemployment is at historic lows. Yet across advanced economies, including in the US, Japan and especially the euro area, there is a softening of economic activity,” she said.

“In some of the largest emerging market economies, such as India and Brazil, the slowdown is even more pronounced this year. In China, growth is gradually coming down from the rapid pace it saw for many years,” Georgieva said.

The precarious outlook presents challenges for countries already facing difficulties including some of the Fund’s programme countries, she noted.

Georgieva called for using monetary policy wisely and enhancing financial stability.

“Now is the time for countries with room in their budgets to deploy or get ready to deploy fiscal firepower. In fact, low interest rates may give some policymakers additional money to spend,” she said.

Referring to new IMF research which shows structural reforms can raise productivity and generate enormous economic gains, she said these changes are key to achieving higher growth over the medium and long-term.

“The right reforms in the right sequence could double the speed at which emerging markets and developing economies reach the living standards of the advanced economies,” Georgieva said.

While the need for international cooperation is going up, the will to engage is going down, she rued.

“Trade is a case in point. And yet, we need to work together. From safely adapting to fintech, to fully implementing the financial regulatory reform agenda, to fighting money laundering and the financing of terrorism,” Georgieva said.

Describing climate change as a crisis where no one is immune and everyone has a responsibility to act, she said one of its priorities was to assist countries as they reduce carbon emissions and become more climate resilient.

At the current average carbon price of $2 per ton, most people and most companies have little financial incentive to make this transition. Limiting global warming to a safe level requires a significantly higher carbon price, she added.

(PTI)

Window to Restructure Global Economy, Ensure Sustainable Development Closing, Warns UN Report

‘Quantitative easing’ has not only failed to ensure a robust recovery, but has also exacerbated the inequalities and disparities breeding ethno-chauvinist populism, says the report.

‘Quantitative easing’ has not only failed to ensure a robust recovery, but has also exacerbated the inequalities and disparities breeding ethno-chauvinist populism, says the report.

The World Economic Situation and Prospects (WESP) was the only such report to identify risks to the global economy before the 2008-2009 global financial crisis, while both the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) largely ignored them. Credit: IPS

The World Economic Situation and Prospects (WESP) was the only such report to identify risks to the global economy before the 2008-2009 global financial crisis, while both the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) largely ignored them. Credit: IPS

Sydney/Kuala Lumpur: More than eight years after the global financial crisis exploded in late 2008, economic growth remains generally tepid, while ostensible recovery measures appear to have exacerbated income and other inequalities. Yet, despite the G-20 group of the world’s largest economies raising the level, frequency and profile of its meetings, effective multilateral cooperation and coordination remains a distant dream.

Little reason to cheer
The UN’s recent World Economic Situation and Prospects (WESP) 2017 offers little cause for comfort:

• the world economy has not yet emerged from the protracted slow growth following the 2008 financial crisis;
• significant uncertainties and risks weigh heavily on its projected modest global recovery for 2017-2018;
• despite modest economic growth, global carbon emissions have not declined in the last two years;
• more alarmingly, new investment in renewable energy dropped sharply in the first half of 2016, as progress in emissions mitigation in recent years could easily be reversed;
• growth in the least developed countries (LDCs) will remain well below the sustainable development goals (SDGs) target in the near term; and
• below-target growth and tax revenue threaten critical public expenditure on healthcare, education, social protection, and climate change adaptation.

Credibility

Unfortunately, the WESP does not attract as much media attention or fanfare as other similar global reports, such as the International Monetary Fund’s (IMF) World Economic Outlook or the OECD’s Global Economic Outlook. Nevertheless, WESP was the only such report to identify risks to the global economy before the 2008-2009 global financial crisis, while both the IMF and OECD largely ignored them.

Even after the US sub-prime housing debt problems became apparent and Lehman Brothers had collapsed, both remained optimistic, predicting a soft-landing in the US at worst, which they suggested would be off-set by robust growth in Europe. Both supported the turn to ‘fiscal consolidation’ as soon as ostensible ‘green shoots of recovery’ were spotted in 2019. Despite greater consideration of ostensibly Keynesian policy options since, seriously Keynesian macroeconomic analysis remains largely off-limits.

Global recovery?

WESP 2017 identifies policy paralysis and lack of policy coordination as among the main factors holding back global economic recovery. Over-reliance on unconventional monetary policy and fiscal consolidation in major economies, especially in Europe, are contributing not only to policy uncertainty, but also to growing inequality.

Protracted weak global demand – due to fiscal contraction, high household debt and growing inequality – has reduced incentives for firms to invest. Political and policy uncertainties, due to events such as Brexit, have also discouraged private investment. Thus, investment has slowed significantly in major developed and emerging economies. The extended period of weak investment is driving the slowdown in productivity growth.

Meanwhile, international trade expanded by just 1.2% in 2016, the third-lowest rate in the past three decades. Slow world trade growth is both contributing to and symptomatic of the global economic slowdown.

What needs to be done?

Thus, WESP 2017 calls for a more balanced policy mix – moving beyond excessive reliance on monetary policy – to restore a healthy growth trajectory over the medium-term for the global economy as well as to tackle some social and environmental dimensions of sustainable development.

Government support for public goods, such as combating climate change, remains crucial, as private investors tend to evaluate risk and return over short-term horizons and under-invest in public priorities. Investment in research and development, education and infrastructure would promote sustainable development as well as social and environmental progress, while supporting productivity growth.

WESP 2017 also calls for greater international coordination to ensure complementarities among trade, investment, and other public policies, and to better align the multilateral trading system with the 2030 Agenda for Sustainable Development to ensure inclusive growth and decent work for all.

Global Green New Deal

Any recession or economic crisis also offers the opportunity to weed-out lagging activities or obsolete practices, and to restructure the economy to put it on a more sustainable path. Thus, to tackle the global financial crisis, in early 2009, the UN proposed a Global Green New Deal (GGND) comprising public work programmes and social protection, including in developing countries. This bold proposal remains relevant as the global economy struggles to recover, and achievement of the SDGs is threatened.

Most critically, public works programmes should be launched, not only in developed countries, which can resort to deficit financing, but also in developing countries, where resources are more limited and policies are generally more hostage to the global financial system. Thus, GGND can not only accelerate economic recovery and job creation, but also address sustainable development challenges more generally. To be more effective, GGND should be part of a broader international counter-cyclical effort comprising three main elements:

1. Financial support for developing countries, provided through the multilateral system, to prevent their economic slowdown.
2. National government-led investment packages in developed and developing countries to revive and ‘green’ national economies.
3. International policy coordination to ensure that developed countries’ investment packages not only create jobs in developed countries, but also have strong developmental impacts in developing countries. These should involve collaborative initiatives among governments of developed and developing countries.

The window of opportunity to restructure the global economy towards a more sustainable path has been closing as governments procrastinate, adopt self-defeating fiscal consolidation policies, and give up economic management responsibility to the monetary authorities. ‘Quantitative easing’ has not only failed to ensure a robust recovery, but has also exacerbated the inequalities and disparities breeding ethno-chauvinist populism. Bold, internationally well-coordinated actions are needed now more than ever.

Anis Chowdhury is a former professor of economics at the University of Western Sydney and held senior UN positions during 2008-2015 in New York and Bangkok. Jomo Kwame Sundaram is a former economics professor and UN assistant secretary-general for economic development and received the Wassily Leontief Prize for advancing the frontiers of economic thought in 2007.

(IPS)