NEW YORK - Global growth is estimated at 2.4 percent in 2015, marking a downward revision by 0.4 percentage points from the UN forecasts presented six months ago, while a modest improvement is projected for 2016/17, says the United Nations World Economic Situation and Prospects (WESP) 2016 report, launched Thursday.
Up ahead, the world economy is projected to grow by 2.9 percent in 2016 and 3.2 percent in 2017, supported by generally less restrictive fiscal and still accommodative monetary policy stances worldwide.
The challenges for policymakers around the globe are likely to intensify in the short run in view of the weaknesses in the world economy and difficult trade-offs in the areas of monetary, fiscal and exchange rate policies, the report points out.
It underscores that monetary authorities would need to make concerted efforts to reduce uncertainty and financial volatility, striking a delicate balance between their economic growth and financial stability objectives.
"The expected timing and pace of normalization of the US monetary policy will help reduce some policy uncertainties and provide impetus to revive investment," said Hamid Rashid, Chief of the UN's Global Economic Monitoring Unit, while presenting the report.
Clarity on the US policy is also expected to prevent excessive volatility in financial markets while ensuring an orderly adjustment in asset prices.
Currently, amid lower commodity prices, large capital outflows and increased financial market volatility, growth in developing and transition economies in particular has slowed to its weakest pace since the global financial crisis of 2008/2009.
Given the much anticipated slowdown in China and persistently weak economic performances in other large emerging economies, notably the Russian Federation and Brazil, the pivot of global growth is partially shifting again towards developed economies, underlines the UN report.
The weakness in growth has started adversely impacting labour markets in many developing and transition economies. Unemployment is on the rise, especially in South America, or remains stubbornly high, such as in South Africa. At the same time, job insecurity is often becoming more entrenched amid a shift from salaried work to self-employment.
"Stronger and more coordinated policy efforts are needed to ensure robust, inclusive and sustainable economic growth, which will be a key determinant for achieving the 2030 Sustainable Development Goals," noted Lenni Montiel, Assistant Secretary-General of the United Nations Department of Economic and Social Affairs.
With persistent output gaps, modest wage growth and lower commodity prices, global inflation is at its lowest level since 2009.
Deflation risks in developed economies have diminished, but not disappeared, particularly in Japan and the euro area.
"Growth in developed economies is expected to gain some momentum in 2016, to surpass the 2 percent mark for the first time since 2010," the report notes.
"Economic growth in developing and transition economies is expected to bottom out and gradually recover, but the external environment will continue to be challenging and growth will remain well below its potential."
Given the massive build-up of private debt in many emerging economies, the UN report urges policymakers to fine-tune their policy mix more active fiscal policies, macro-prudential instruments, targeted labour market policies, among others amid volatile global financial conditions.
The report highlights that monetary policies did most of the heavy-lifting since the global crisis to support growth but the time has come for fiscal policies to play a greater role.
Well-designed and targeted labour market strategies are needed to complement fiscal policies to re-invigorate productivity, employment generation and output growth, the report stresses.
Striving to put focus on environment concerns at a time when the UN summit on climate change is nearing the end of its 12-day deliberation in Paris to chart new commitments to check emissions, the report highlights the fact that for the first time in two decades "global energy related carbon emissions experienced no growth in 2014". The only exceptional year is 2009, when the global economy contracted.