Belgium, (Brussels Morning Newspaper) The United Nations lowered its global GDP forecast on Wednesday from 4% to 3.1%, blaming Russia for the downturn.
According to UN Secretary-General António Guterres, the war in Ukraine has caused growth of commodity and food prices, AP reports Wednesday.
The UN expects slower growth in all parts of the world, including the EU, the US, China and most other countries, warning that expected growth “faces significant downside risks from further intensification of the war in Ukraine and potential new waves of the pandemic.”
The conflict in Ukraine will drive up fertiliser prices, which will affect developing countries the most, the UN warned in its World Economic Situation and Prospects report.
Rising fertiliser prices will further drive up food prices, deepening poverty and food insecurity, especially in developing countries.
The UN expects global inflation to reach 6.7% this year, more than twice the average from the period between 2010 and 2020 which stood at roughly 2.9%.
“The war in Ukraine – in all its dimensions – is setting in motion a crisis that is also devastating global energy markets, disrupting financial systems and exacerbating extreme vulnerabilities for the developing world,” Guterres warned.
Guterres calls for action
He called for “quick and decisive action” aimed at securing food and energy supply to open markets and added that this will require fewer export restrictions, release of reserves and measures to address rising food prices.
The UN pointed out that effects of the conflict in Ukraine are spilling over to Europe and Central Asia.
The EU is affected as the bloc is dependent on energy imports, especially from Russia, with the UN predicting that the EU economy will grow 2.7% this year, down 1.2 percentage points from the January forecast.
It expects China’s GDP to grow 4.5% this year in contrast with 8.1% in 2021, pointing out that restrictions imposed with the aim of curbing the spread of coronavirus limit economic activity.
“The resulting slowdown in economic activities contributed to prolonging supply chains disruptions, negatively affecting other developing countries through trade channels,” the report notes.
The UN expects developing economies to grow 4.1% this year, in contrast with 6.7% in 2021.
Guterres noted that he maintains “intense contact” with Ukraine, Russia, Turkey, the EU and the US to restore export of Russian fertiliser and Ukrainian grain.
“I am hopeful, but there is still a way to go… the complex security, economic and financial implications require goodwill on all sides,” he concluded.