Poverty is on the rise in a number of countries in sub-Saharan Africa, Latin America and Western Asia, according to the United Nations.
“Although progress has been achieved in global terms, the number of people living in extreme poverty has risen in several sub-Saharan African countries and in parts of Latin America and the Caribbean and Western Asia,” the UN report titled, World Economic Situation and Prospects 2020 said. “Sustained progress towards poverty reduction will require both a significant boost to productivity growth and firm commitments to tackle high levels of inequality,” it said.
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, the report said.
The GDP (Gross Domestic Product) growth for Africa is projected to increase from 2.9 per cent in 2019 to 3.2 per cent in 2020, but is insufficient for meaningful progress towards sustainable development. Despite some bright spots such as Ethiopia, Rwanda and Cote D’Ivoire, Africa as a whole has experienced a decade of near stagnation in per capita GDP, it points out.
Annual per capita income growth of over 8 per cent would be needed to eradicate poverty in Africa from the woefully inadequate rate of 0.5 per cent recorded over the past decade.
In Latin America and the Caribbean, a slow and uneven recovery is projected, with growth rising from 0.1 per cent in 2019 to 1.3 per cent in 2020 and 2.0 per cent in 2021.
In Western Asia, economic growth is forecast at 2.4 per cent in 2020 and 2.8 per cent in 2021, but prospects are clouded by volatile oil prices, deterioration in the real estate sector, and geopolitical tensions, it said.
Meanwhile, global economic growth is forecast to edge up to 2.5 per cent in 2020, a slight rise from 2.3 per cent in 2019 but a flare up of trade tensions, financial turmoil, or an escalation of geopolitical tensions could derail a recovery. In a downside scenario, global growth would slow to just 1.8 per cent this year.
“A prolonged weakness in global economic activity may cause significant setbacks for sustainable development, including the goals to eradicate poverty and create decent jobs for all. At the same time, pervasive inequalities and the deepening climate crisis are fuelling growing discontent in many parts of the world,” the report said.
In the US, recent interest rate cuts by the Federal Reserve may lend some support to economic activity. However, given persistent policy uncertainty, weak business confidence and waning fiscal stimulus, GDP growth in the US is forecast to slow to 1.7 per cent in 2020 from 2.2 per cent in 2019.
In the European Union, manufacturing will continue to be held back by global uncertainty, but this will be partially offset by steady growth in private consumption, allowing a modest rise in GDP growth from 1.4 per cent in 2019 to 1.6 per cent in 2020.
East Asia remains the world’s fastest growing region and the largest contributor to global growth, according to the report. In China, the world's second largest economy, GDP growth is projected to moderate gradually to 6.0 per cent in 2020 and 5.9 per cent in 2021 from 6.1 per cent in 2019.
Growth in other large emerging countries, including Brazil, India, Mexico, Russia and Turkey, is expected to gain some momentum in 2020.
The UN report also said climate change, persist 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," said Elliott Harris, UN chief economist and assistant secretary-general for economic development. "This requires prioritising investment in sustainable development projects to promote education, renewable energy, and resilient infrastructure.”
Over reliance on monetary policy is not just insufficient to revive growth, it also entails significant costs, including the exacerbation of financial stability risks, the report said. A more balanced policy, one that stimulates economic growth while moving towards greater social inclusion, gender equality, and environmentally sustainable production is needed to boost growth.