The United Nations forecast Wednesday that global economic growth will fall significantly to 1.9% this year as a result of the food and energy crisis sparked by the war in Ukraine, the ongoing impact of the COVID-19 pandemic, persistently high inflation and the climate emergency.
Painting a gloomy and uncertain economic outlook, the U.N. Department of Economic and Social Affairs said the current global economic slowdown “cuts across both developed and developing countries, with many facing risks of recession in 2023.”
“A broad-based and severe slowdown of the global economy looms large amid high inflation, aggressive monetary tightening, and heightened uncertainties,” U.N. Secretary-General Antonio Guterres said in a foreword to the 178-page report.
The report said this year’s 1.9% economic growth forecast – down from an estimated 3% in 2022 – is one of the lowest growth rates in recent decades. But it projects a moderate pick-up to 2.7% in 2024 if inflation gradually abates and economic headwinds start to subside.
In its annual report earlier this month, the World Bank which lends money to poorer countries for development projects, cut its growth forecast nearly in half, from it previous projection of 3% to just 1.7%.
The International Monetary Fund, which provides loans to needy countries, projected in October that global growth would slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. IMF Managing Director Kristalina Georgieva said at last week’s World Economic Forum in Davos that 2023 will be a difficult year, but stuck by the projection and said “we don’t expect a global recession.”
According to the U.N. report, this year “growth momentum has weakened in the United States, the European Union and other developed economies, adversely affecting the rest of the world economy.”
In the United States, GDP is projected to expand by only 0.4% in 2023 after estimated growth of 1.8% in 2022, the U.N. said. And many European countries are projected to experience “a mild recession” with the war in Ukraine heading into its second year on Feb. 14, high energy costs, and inflation and tighter financial conditions depressing household consumption and investment.
The economies in the 27-nation European Union are forecast to grow by just 0.2% in 2023, down from an estimated 3.3% in 2022, the U.N. said. And in the United Kingdom, which left the EU three years ago, GDP is projected to contract by 0.8% in 2023, continuing a recession that began in the second half of 2022, it said.
With China’s government abandoning its zero-COVID policy late last year and easing monetary and fiscal policies, the U.N. forecast that its economy, which expanded by only 3% in 2022, will accelerate to 4.8% this year.
“But the reopening of the economy is expected to be bumpy,” the U.N. said. “Growth will likely remain well below the pre-pandemic rate of 6-6.5%.”
The U.N. report said Japan’s economy is expected to be among the better-performing among developed countries this year, with GDP forecast to increase by 1.5%, slightly lower than last year’s estimated growth of 1.6%.
Across east Asia, the U.N. said economic recovery remains fragile though GDP growth in 2023 is forecast to reach 4.4%, up from 3.2% last year, and stronger than in other regions.
In South Asia, the U.N. forecast average GDP growth will slow from 5.6% last year to 4.8% this year as a result of high food and energy prices, “monetary tightening and fiscal vulnerabilities.”
But growth in India, which is expected to overtake China this year as the world’s most populous nation, is expected to remain strong at 5.8%, slightly lower than the estimated 6.4% in 2022, “as higher interest rates and a global slowdown weigh on investments and exports,” the U.N. report said.
In Western Asia, oil-producing countries are benefiting from high prices and rising output as well as a revival in tourism, the U.N. said. But economies that aren’t oil producers remain weak “given tightening access to international finance and severe fiscal constraints,” and average growth in the region is projected to slow from an estimated 6.4% in 2022 to 3.5% this year.
The U.N. said Africa has been hit “by multiple shocks, including weaker demand from key trading partners (especially China and Europe), a sharp increase in energy and food prices, rapidly rising borrowing costs and adverse weather events.”
One result, it said, is mounting debt-servicing burdens which have forced a growing number of African governments to seek bilateral and multilateral support.
The U.N. projected economic growth in Africa to slow from an estimated 4.1% in 2022 to 3.8% this year.
In Latin America and the Caribbean, the U.N. said the outlook “remains challenging,” citing labour market prospects, stubbornly high inflation and other issues. It forecast that regional growth will slow to just 1.4% in 2023 from an estimated expansion of 3.8% in 2022.
“The region’s largest economies – Argentina, Brazil and Mexico – are expected to grow at very low rates due to tightening financial conditions, weakening exports, and domestic vulnerabilities,” the U.N. said.
For the world’s least developed countries, the U.N. said growth is projected at 4.4% this year, about the same as last year but significantly below the UN’s target of 7% by 2030.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
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