The global economy has suffered a significant slowdown amid prolonged trade disputes and wide-ranging policy uncertainties. While a slight uptick in economic activity is forecast for 2020, the World Economic Situation and Prospects 2020 warns that economic risks remain strongly tilted to the downside, aggravated by deepening political polarization and increasing scepticism over the benefits of multilateralism. 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.

Compounding the economic slowdown, rising global temperatures and the increasing frequency and intensity of weather-related shocks press home the urgent need for a dramatic shift in the global energy mix. The World Economic Situation and Prospects 2020 explores the global economic implications of this energy transition. The transition to a cleaner energy mix will bring not only environmental and health benefits, but economic opportunities for many. However, without appropriate policy strategies, the costs and benefits will be unevenly distributed within and between countries.

Progress towards higher living standards has stalled for many

Africa has experienced a decade of near stagnation in per capita GDP and many countries around the world are still ailing from the effects of the commodity price downturn of 2014-16, which resulted in persistent output losses and setbacks in poverty reduction. In one-third of commodity-dependent developing countries
(home to 870 million people), average real incomes are lower today than they were in 2014. This includes several large countries such as Angola, Argentina, Brazil, Nigeria, Saudi Arabia and South Africa.

At the same time, the number of people living in extreme poverty has risen in several sub-Saharan African countries and in parts of Latin America and Western Asia. Sustained progress towards poverty reduction will require both a significant boost to productivity growth and firm commitments to tackle high levels of inequality. UN estimates indicate that to eradicate poverty in much of Africa, annual per capita growth of over 8 per cent would be needed, compared to the just 0.5 per cent average rate over the past decade.

Headline GDP growth misses crucial aspects of sustainability and well-being

Beyond GDP growth, other measures of well-being paint an even bleaker picture in several parts of the world. The climate crisis, persistently high inequalities, and rising levels of food insecurity and undernourishment continue to affect the quality of life in many societies.

“Policymakers should move beyond a narrow focus on merely promoting GDP growth, and instead aim to enhance well-being in all parts of society. This requires prioritizing investment in sustainable development projects to promote education, renewable energy, and resilient infrastructure,” emphasized Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development.