The global economy is recovering, but mostly at the expense of booming growth.
Will the global economic crisis caused by the pandemic be overcome this year? Are we at risk of further job losses? Who has been hit hardest by the crisis? How to speed up the economic recovery? A new report from the UN Department of Economic and Social Affairs answers these questions. Five facts: everything you need to know about the state of the global economy.
First, the U.S. and China are expected to register strong GDP growth this year, but developing countries are still a long way from reaching their pre-crisis levels. For many emerging economies, the pandemic and the associated crisis are far from over: Vaccination is progressing sluggishly and financial problems are worsening. Overall, after the global economy contracted by 3.6 percent in 2020, it is expected to grow 5.4 percent this year. This is more than the UN economists predicted in January.
Second, the most vulnerable populations are the first to suffer. Quarantine measures to stop the spread of the coronavirus infection have led to heavy losses in the labor market, especially in the service sector, where many women are employed. Also affected are those who work informally, i.e. without employment contracts - if they lose their earnings, these people do not receive social assistance and often do not have access to health care. In many countries of Africa and Latin America, the economy will not return to pre-pandemic levels until 2022-2023.
Third, global trade is recovering fast, especially in Asia: demand for electronics and medical devices has already surpassed pre-pandemic levels. The services market is still lagging, due to restrictions on international travel.
Exports have risen sharply for Asian economies, while Africa, West Asia and the Commonwealth of Independent States (CIS) have not.
Fourth, the crisis associated with the COVID-19 pandemic has exacerbated the situation of women and girls - these groups have suffered more than others from losses in labor markets and the economic gender gap has widened.
Increased workloads at home have forced many of the world's women to drop out of school and work outside the home. Many girls and young women will not resume their education soon, and some will not return to the classroom at all. This means that the gender gap in education, income, and resource allocation will only widen.
Fifth, the report recommends that governments take steps to mitigate the impact of the crisis on the most affected populations. In particular, it is proposed to develop policies taking into account the growth of gender inequality.
UN experts recall that women have been marginalized in decision-making since the beginning of the pandemic and recommend changing this state of affairs. Economists believe that by helping women and girls overcome economic hardship, the recovery can be accelerated, and that it will be more inclusive and sustainable.
In the CIS and Georgia, there has been some recovery in economic activity late last year and early this year. Even if modest, the growth is due to the recovery of commodity prices, UN economists say. Despite the third wave of the pandemic, many states in the region managed to avoid the reintroduction of a full-scale restrictions regime.
GDP growth in the CIS and Georgia is estimated at 3.3 percent this year. The region's economies will add the same amount next year. Russia will grow by 3 percent, yet the economic situation may be adversely affected by possible additional sanctions and the government's "fiscal conservatism. The Ukrainian economy's prospects largely depend on receiving tranches from the International Monetary Fund, the report notes.
Although movement between Russia and Central Asia is gradually recovering, the cost of travel is too high for migrants, so people cannot travel for work, and the flow of remittances is unlikely to reach pre-pandemic levels anytime soon.
Vaccination in the countries of the region, with the exception of the Russian Federation, has been slow, which also has a negative impact on the recovery process. Meanwhile, rising food and commodity prices have increased the risk of inflation: several countries in the region have seen their currencies devalue and central banks have begun to raise interest rates.