Why has the UNCTAD revised its global growth forecast upwards?

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UNCTAD Revises Global Growth Forecast Upwards Due to Stronger US Recovery

The United Nations Conference on Trade and Development (UNCTAD) has revised its global economic growth forecast upwards to 4.7 per cent for the current year. This adjustment is primarily driven by a more robust than anticipated recovery in the United States, which is expected to significantly boost consumer spending.
Stronger US Economic Performance

The upward revision by UNCTAD reflects an anticipated surge in US consumer spending. This optimism is underpinned by the accelerated distribution of Covid-19 vaccines and the implementation of a substantial stimulus package within the United States. These factors combined are seen as key drivers for a more vigorous economic rebound in the world's largest economy.
Continued Global Recovery Amidst Uncertainty

The global economic recovery that commenced in the third quarter of 2020 is projected to persist through 2021. However, the report cautions that this recovery is likely to be marked by significant unevenness and a degree of unpredictability. These uncertainties stem from various factors, including the ongoing epidemiological situation, differing policy responses across nations, and coordination challenges.
Lasting Economic Scars and Risks

Despite the revised positive outlook, UNCTAD highlights that the Covid-19 pandemic will leave enduring economic consequences. The report emphasizes the necessity for continued government support to navigate these lasting effects. A significant risk identified is the potential for a premature return to austerity measures, which could undermine the ongoing recovery efforts.
Impact of the Pandemic in 2020

The pandemic's impact in the preceding year was substantial, with an estimated 3.9 per cent drop in global output. The spread of the coronavirus and subsequent lockdowns led to what UNCTAD describes as an "exorbitant" destruction of income on an unprecedented scale, disproportionately affecting developing countries. Nevertheless, the report acknowledges that preemptive actions by central banks to avert financial meltdown, along with substantial relief packages and a rebound in commodity prices, helped mitigate a more severe outcome.

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Why has the UNCTAD revised its global growth forecast upwards?

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