A shift is taking place in the global economic decision-making power. A United Nations (UN) report points out that global economic balance is shifting from the European Union, the United States and other developed countries towards China, India and other developing countries. The report calls for recognising this shifting balance for better global cooperation while continuing to allow the under-represented to be heard.
The World Economic Situation and Prospects 2020 report of the UN, launched on January 17, wants national policies to be complemented by more effective global cooperation as several development challenges faced by countries are global in nature and cannot be adequately addressed by domestic structural policies alone. "Recognising the shift in balance becomes crucial here as national policies need to be complemented by more effective international cooperation in order to achieve shared goals, particularly in the areas of climate change, international trade and finance," the report says.
Commenting on India's economic performance, the report notes that economic activity will regain some momentum in the country as the effects of a credit crunch ease and fiscal stimulus measures kick in.
"In India, the rate of economic expansion fell sharply from 6.8 per cent in 2018 to 5.7 per cent in 2019 owing to slackening investment, subdued consumer sentiment, and weak manufacturing and services growth. The slowdown in India has dampened export growth across the region but has had a particularly serious impact on countries such as Afghanistan and Nepal, whose economies rely heavily on trade in raw and minimally processed goods with India. The government has responded to the country's disappointing economic growth performance-the combined result of policy uncertainty, a credit crunch, and the pass-through effects of the global slowdown-by committing to fiscal stimulus measures such as corporate tax cuts, increased government spending and expanded support for the struggling automobile industry to complement its already loose but thus far largely ineffective monetary policy. The resulting growth in investment and private consumption is expected to boost economic expansion from 2020 onward, though it will probably take several years for growth rates to return to their previous levels, as the Government will find it increasingly difficult to keep up the fiscal expansion," the report says.
The report forecasts India's economic growth to return to 6.6 per cent in 2020, with inflation close to 4 per cent. The government deficit is expected to widen in the coming years, limiting the country's space for spending on infrastructure, social security and other increasingly important priorities for long-term development, it said.
The World Economic Situation and Prospects 2020 has been jointly prepared by the United Nations Department of Economic and Social Affairs (UN DESA), the United Nations Conference on Trade and Development (UNCTAD) and the five United Nations regional commissions.