The world's economic growth, which had last year dropped to its lowest levels since the global financial crisis (2008-09) may see a modest uptick in 2020—but only if risks are at bay, cautions the United Nations in its World Economic Situation report unveiled on Friday. But the potential for further setbacks are high, the report warns.
Global economic growth had fallen to 2.3 per cent in 2019. The UN report hopes that it could pick-up slightly to 2.5 per cent this year, provided a flare-up in trade tensions, financial turmoil or escalation of geopolitical tensions does not derail it.
While growth prospects for the fast-growing Asian countries having weakened, the report feels India will slowly rebound this year. “This year, we will begin a gradual rise back up,” said Nagesh Kumar, head of UN's Economic and Social Commission for Asia and the Pacific, in Delhi. “2019 was very bad. In a couple of years, (India) should be back to where it was. Hopefully by then, international recovery should help.”
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Economic growth in South Asia, including India, is expected to pick up to 5.8 per cent in the coming financial year, a positive swing after about two years of dismal slowdown. This include a drop to the decade's lowest growth of 3.3 per cent last year for the whole region, while India fell from 6.8 per cent in 2018 to 5.7 per cent in 2019. The region struggled in 2019 with a combination of external headwinds, notably the global economic slowdown and falling trade, and country-specific domestic challenges (like India's NBFC liquidity crisis), says the report. It goes on to add that as effects of one-off shocks wane and governments respond with vigorous fiscal expansion, economic activity will rebound in most of the countries.
The combination of fiscal stimulus and financial sector reforms, boosting investment and consumption is expected to support a recovery in growth to 6.6 per cent for India, says the report, though it will take continued structural reforms to bring India's growth back to its previous levels.
