UN warns global growth at risk from political and trade tensions

18 May 18

Global growth is “exceeding expectations” but political tension and trade uncertainty could “derail the current upturn”, the United Nations has warned. 

Although the global economy is expected to expand by more than 3% this year and next, there are a rising risks caused by international trading system, the UN said in a report.

Rising trade tensions between major economies, such as European countries and the US following president Donald Trump’s steel tariffs, has increased uncertainty and elevated debt levels.

This increase in geopolitical tensions could potentially “derail the current upturn”, the report said.

Elliott Harris, UN assistant secretary general for economic development and chief economist, said the growth forecast was positive and would meet the 2030 sustainable development goals.

But he added “there is a strong need not to become complacent in response to upward tending headline figures”.

Harris said the rising risk “highlights the need to urgently address a number of policy challenges, including threats to the multilateral trading system, high inequality and the renewed rise in carbon emissions”.

The UN’s World Economic Situation and Prospects report said widespread increases in demand had accelerated the overall growth in trade, while many commodity-exporting countries will also benefit from higher energy and metal prices.  

But trade barriers and retaliatory measures mark a shift in the international trading system, the report said.

This threatens the pace of global growth, especially for developing countries.

Increased efforts to tackle inequality, particularly through targeted social policies, can ensure that recent economic gains are more widely shared and to advance the implementation of the SDGs.

Global growth is expected to hit 3.2% in both 2018 and 2019, an upward revision from forecasts released in December last year.

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