New Delhi, January 30
The United Nations report on the global economic situation and prospects in 2023 has identified India as the sole bright spot in the economy though its employment-providing potential is a source of concern.
In South Asia, the economic outlook has significantly deteriorated due to high food and energy prices, monetary tightening and fiscal vulnerabilities. Average GDP growth is projected to moderate from 5.6 per cent in 2022 to 4.8 per cent in 2023 but the growth in India is expected to remain strong at 5.8 per cent, slightly lower than the estimated 6.4 per cent in 2022, due to higher interest rates and a global slowdown weighing on investment and exports, said the report.
The unemployment rate in India in 2022 declined to pre-pandemic levels through stepped-up urban and rural employment but youth employment remained below pre-pandemic levels, particularly among young women, given the pandemic’s severe impacts on economic sectors where “women tend to cluster”, it said.
However, the prospects are more challenging for other economies in the region with Bangladesh, Pakistan and Sri Lanka seeking financial assistance from the IMF.
The outlook is challenging for Pakistan where the economy is expected to expand by only 2.5 per cent in 2023. Sri Lanka’s economy contracted by an estimated 9 per cent in 2022 and is likely to shrink by another 3.2 per cent in 2023.
World output growth as a whole is projected to decelerate from an estimated 3 per cent in 2022 to only 1.9 per cent in 2023, marking one of the lowest growth rates in recent decades. Global growth is forecast to moderately pick up to 2.7 per cent in 2024, if, as expected, some macroeconomic headwinds begin to subside next year.
In advanced economies, growth momentum has weakened in the US and the EU, adversely affecting the rest of the world economy. In the US, GDP may expand by only 0.4 per cent in 2023 after estimated growth of 1.8 per cent in 2022. The prospects for the UK’s economy are particularly bleak. A recession began in the second half of 2022 and the GDP may contract by 0.8 per cent in 2023.
Growth in China is projected to moderately improve in 2023 after weaker-than-expected performance in 2022 when the economy expanded by only 3 per cent. It is expected to touch 4.8 per cent in 2023.
