The world economy is growing by about 3 percent, the highest growth level since 2011, and this upturn paves the way to re-orient policy towards longer-term issues, a UN report said.
The policy shift could mean addressing climate change, tackling existing inequalities, and removing institutional obstacles to development, said the United Nations World Economic Situation and Prospects (WESP) report for Europe released in Geneva.
The economic upturn is largely because crisis-related fragilities and the adverse effects of other recent shocks have subsided, said the UN agency.
“The improvement is widespread, with roughly two-thirds of countries worldwide experiencing stronger growth in 2017 than in the previous year,” said senior UNCTAD (United Nations Conference on Trade and Development) economist Richard Kozul-Wright.
Global growth is expected to remain steady at 3.0 percent in 2018 and 2019.
Kozul-Wright cautioned, however, “Despite the improved short-term outlook, the global economy continues to face risks — including changes in trade policy, a sudden deterioration in global financial conditions and rising geopolitical tensions.”
He said the world economy also faced longer-term challenges.
“The report highlights four areas where the improved macroeconomic situation opens the way for policy to address these challenges: increasing economic diversification, reducing inequality, supporting long-term investment and tackling institutional deficiencies,” said the UNCTAD economist.
For the European Union (EU), economic activity remains robust, with real gross domestic product (GDP) projected to grow by 2.1 percent in 2018.
Private consumption will remain a major driver of growth, underpinned by rising disposable incomes, falling unemployment, further upward pressure on wages, and low interest rates.
In the United Kingdom, however, growth will decelerate to 1.4 percent in both 2018 and 2019, as the economy faces increasing pressure from the effects of Brexit, Britain’s decision to leave the European Union (EU).
For Europe, Brexit negotiations will remain a major source of uncertainty.
The report says any negative surprises or perceived increase in the probability of a negotiation failure would hamper business investment in Britain.
However, several economies are expected to experience stronger growth. In Spain, GDP is forecast to grow by 2.6 percent in 2018 and 2.4 percent in 2019, driven by private consumption, fixed investment, especially in construction and machinery along with solid external demand, including tourism.
A similar combination of solid domestic and external demand will drive growth in Ireland, with the economy projected to expand by 2.8 percent in 2018 and 3.1 percent the following year.
By contrast, Italy will register the lower growth of 1.4 percent in 2018 and 1.1 percent in 2019.