The UN Department of Economic and Social Affairs (DESA) issued the 2023 edition of its World Economic Situation and Prospects (WESP) report, which estimates global economic growth in 2023 to hit one of the lowest rates in recent decades. The report projects world output growth to decelerate to 1.9% in 2023 – a drop of more than a percentage point from 3% in 2022. It calls for stronger fiscal measures “to resuscitate global economy and support development agenda.”

The report paints a bleak economic picture for the near term, which it casts against the background of “severe and mutually reinforcing shocks,” including the COVID-19 pandemic, the war in Ukraine with concomitant food and energy crises, surging inflation, debt tightening, and the climate emergency. While it is cautiously optimistic about global growth picking up to 2.7% in 2024, it acknowledges that even this moderate increase would depend on “the pace and sequence of further monetary tightening, the course and consequences of the war in Ukraine, and the possibility of further supply-chain disruption.”

Uncertain economic futures also threaten the achievement of the SDGs, as the 2023 SDG Summit in September marks the mid-point in their implementation, flags the report. With weakened growth in the US, the EU, and other developed countries in 2022 adversely impacting the rest of the global economy, several countries face prospects of a recession.

To avoid further downturn and curb inflation, over 85% of central banks worldwide tightened monetary policy and raised interest rates since late 2021, according to WESP. While global inflation is projected to drop from its multi-decade high of about 9% in 2022 to 6.5% in 2023, it will “remain elevated.”   

WESP findings indicate that slower growth, elevated inflation, and increasing debt vulnerabilities threaten to “set back hard-won achievements in sustainable development,” further exacerbating the effects of the current crises on developing countries. For example, in 2022, the number of people facing acute food insecurity had more than doubled from 2019 levels, to nearly 350 million.

Warning that “economic weakness and slow income growth would not only hamper poverty eradication, but also constrain countries’ ability to invest in the SDGs more broadly,” the report cautions against “fiscal austerity which would stifle growth … and stymie development prospects across generations.” Instead, it recommends “reallocation and reprioritization of public expenditures” to create jobs and revive economic growth. Among concrete policy measures, the report calls for: strengthening of social protection systems; targeted and temporary subsidies; cash transfers; and discounts on utility bills.

The report further recommends strategic public investments in education, health, digital infrastructure, new technologies, and climate change mitigation and adaptation, which, it argues, “can offer large social returns, accelerate productivity growth, and strengthen resilience to economic, social and environmental shocks.” It emphasizes the need for stronger international commitment to:

• expand access to emergency financial assistance;
• restructure and reduce debt burdens across developing countries; and
• scale up SDG financing to “a few trillion dollars per year.”

The World Economic Situation and Prospects 2023 was released on 25 January. DESA developed the report in partnership with the UN Conference on Trade and Development (UNCTAD) and the five UN regional commissions. The UN World Tourism Organization (UNWTO) also contributed to the report. [Publication: World Economic Situation and Prospects 2023] [Executive Summary] [Publication Landing Page] [UN Press Release] [DESA Press Release]