UN World Economic Situation and Prospects 2015 (WESP) report released

The UN World Economic Situation and Prospects 2015 (WESP) report was released on 10 December 2014.

According to report, global economic growth is forecasted to continue increasing over the next two years, despite legacies from the financial crisis continuing to weigh on growth, and the emergence of new challenges, including geopolitical conflicts such as in Ukraine, and the Ebola outbreak in West Africa.

Highlights of the WESP 2015 report

• The global economy is expected to grow at 3.1 percent in 2015 and 3.3 percent in 2016. These figures are higher than the 2.6 percent growth recorded in 2014, where the pace of expansion has been moderate and uneven.
• Among the developed countries, the United States fared well and has maintained economic growth above 2 percent in 2014, and expected to continue growth of 2.8 percent in 2015 and 3.1 percent in 2016.
• Economic growth in South Asia is also set to gradually pick up from an estimated 4.9 percent in 2014 to 5.4 percent in 2015 and 5.7 percent in 2016.
• In 2014, Economic growth of East Asia, including China managed to register relatively robust growth, while India led South Asia to a moderate strengthening.
• The developing countries as a group are expected to grow at 4.8 percent in 2015 and 5.1 percent in 2016, up from the 4.3 percent estimated for 2014.
• Average inflation for developing economies will also fall slowly over the outlook period.
• The inflation for East Asia will stay around the recent levels of 23 percent over the outlook period.
• A pronounced decrease is forecast for South Asia due to falling inflation in almost all countries, especially in India and Iran.
• Regional average inflation for South Asia is projected to decrease gradually from 14.7 percent in 2013 to 7.2 percent in 2016.
• Apart from India, the baseline forecast projects a moderate growth recovery in 2015 and 2016 for almost all emerging economies, including Brazil, Indonesia, Mexico, Russia, South Africa and Turkey.
• A slight improvement of economic growth is expected in Western Europe from 1.7 percent in 2015 to two percent in 2016.
• The Western Europe is held back by the travails of the euro area, where the level of GDP has yet to regain its pre-recession peak.
• It is imperative to strengthen international policy coordination to reduce risks and meet challenges of global economy.
• The forthcoming further normalization of the US Federal Reserves monetary policy posed significant risks and uncertainties for the global economic outlook, depending on the timing and strategy of the monetary tightening, as well as the response by financial markets.
• Along with robust external demand, global economic growth is expected to be underpinned by a moderate strengthening of domestic consumption and investment as countries benefit from improved macroeconomic conditions.
• Some economic indicators are positive and moving in the right direction which points to the potential for a gradual return to consistent economic growth, many risks and uncertainties could dash efforts to get the global economy on track and moving forward.
• There is a significant downside risks for the South Asian region due to the continuing fragility of the global economy and considerable country-specific weaknesses, including political instability and the agricultural dependency on the monsoon.
• The worldwide macroeconomic policies should be aligned toward supporting robust and balanced growth, creating productive jobs, and maintaining long-term economic and financial stability.

WESP on India

• The recovery in South Asia will be led by India, which accounts for about 70 percent of regional output and other economies such as Bangladesh and Iran are also projected to see stronger growth in the forecast period.
• Economic growth of India, which is estimated to record a 5.4 percent economic growth in 2014, will improve to 5.9 percent in 2015 and 6.3 percent in 2016. 
  India is likely to make progress in implementing economic policy reforms and help provide support to business and consumer confidence.
• The forecasted growth of India about six percent growth in 2016 will be the highest since the 2008-2011 period when it had grown at about 7.3 percent. It has slowed to 4.7 percent in 2012.