The world economy will recover in 2021 with growth of 5,3 percent, the fastest in almost 50 years, but progress will be very uneven by region, sector and income, according to the United Nations Conference on Trade and Development (UNCTAD).
In its Trade and Development Report 2021, released on Wednesday (15.09.2021), UNCTAD argues that this will be possible thanks to the continuation of the radical policy interventions initiated in 2020 and the successful (albeit still incomplete) rollout of the vaccine in advanced economies.
The report highlights that constraints on fiscal space, lack of monetary autonomy and access to vaccines are holding back many developing economies, widening the gap with advanced economies and threatening to usher in another lost decade.
At the same time, Rebecca Grynspan, Secretary-General of UNCTAD, he said: “These widening gaps, both domestic and international, are a reminder that underlying conditions, if left in place, will make resilience and growth luxuries enjoyed by fewer and fewer privileged people.”
The new Secretary General stressed that “Without bolder policies that reflect a revitalized multilateralism, equity will not be achieved nor will the challenges of our times be met during the post-pandemic recovery.«.
UNCTAD estimates that global growth will slow to 2022% in 3,6, leaving global income 3,7% below the level expected based on the post-COVID-19 trend.
According to the report, international trade in goods and services has recovered after a 5,6% drop in 2020. Projections point to real growth of 9,5% in 2021.
The report highlights the positive trend in commodity prices since the low observed in the second quarter of 2020, including the rebound of the manufacturing industry in China and the strong recovery in the United States. It details that the aggregate commodity index registered an increase of 25% from December 2020 to May 2021, mainly due to hydrocarbon prices that increased by 35%, while minerals and metals experienced an increase of 13%.
When analyzing the regional trends, the document argues that in the Americas, the rapid recovery in the United States will lead to GDP rising to 2% above its pre-Covid-19 level, pushing Canada in that direction to its 2019 level. If not, it will happen with Mexico due to its relatively deeper recession. Argentina is in a similar situation as a result of severe financial constraints, largely resulting from its heavy pre-pandemic external debt. In addition, UNCTAD notes that Brazil should grow this year slightly above its 2019 GDP, thanks to the positive effect of higher commodity exports and the relatively larger increase in fiscal stimulus than in Mexico and Argentina.
Finally, UNCTAD calls for concerted debt relief and (in some cases) to its cancellation, to a Reassessing the role of fiscal policy in the global economy, An Greater policy coordination among systemically important economies and even Bold support for vaccine rollout in developing countries, including a waiver of intellectual property rights to accelerate manufacturing and supply.
Given the current circumstances that reveal the damage caused by past policies, the main organ of the UN General Assembly urges “renewing international support for developing countries” to move towards a better future.Report on Trade and Development 2021)
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