CHAPTER II

THE FUTURE OF GLOBAL TRADE

andWorld Economic
Situation
Prospects

United Nations
New York, 2022

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WORLD ECONOMIC SITUATION AND PROSPECTS 2022

The World Economic Situation and Prospects 2022 is a report produced by the United Nations
Department of Economic and Social Affairs (UN DESA), in partnership with the United
Nations Conference on Trade and Development (UNCTAD) and the five United Nations regional
commissions: Economic Commission for Africa (UNECA), Economic Commission for Europe(UNECE), Economic Commission for Latin America and the Caribbean (UNECLAC), Economic andSocial Commission for Asia and the Pacific (UNESCAP) and Economic and Social Commission forWestern Asia (UNESCWA). The United Nations World Tourism Organization (UNWTO) also contributed
to the report.
For further information, visit https://www.un.org/en/desa or contact:

UN DESA
Liu Zhenmin, Under-Secretary-General
Department of Economic and Social Affairs
Room S-2922
United Nations
New York, NY 10017
USA( +1-212-9635958
undesa@un.org
UNCTAD
Rebeca Grynspan, Secretary-General
United Nations Conference on Tradeand Development
Room E-9042
Palais de Nations, 8–14
1211 Geneva 10
Switzerland( +41-22-9175806
sgo@unctad.org
UNECA
Vera Songwe, Executive Secretary
United Nations Economic Commission for Africa
Menelik II Avenue
P.O. Box 3001
Addis Ababa
Ethiopia( +251-11-5511231
ecainfo@uneca.org
UNECE
Olga Algayerova, Executive Secretary
United Nations Economic Commission for
EuropePalais des Nations
CH-1211 Geneva 10
Switzerland( +41-22-9174444
unece_info@un.org

UNECLAC
Alicia Bárcena, Executive Secretary
Economic Commission for Latin America
and the Caribbean
Av. Dag Hammarskjöld 3477
Vitacura
Santiago, Chile
Chile( +56-2-22102000
secepal@cepal.org
UNESCAP
Armida Salsiah Alisjahbana, Executive
Secretary
Economic and Social Commission for Asiaand the PacificUnited Nations Building
Rajadamnern Nok Avenue
Bangkok 10200
Thailand( +66-2-2881234
escap-scas@un.org
UNESCWA
Rola Dashti, Executive Secretary
Economic and Social Commission for Western
Asia
P.O. Box 11-8575
Riad el-Solh Square, Beirut
Lebanon( +961-1-981301@ https://www.unescwa.org/contact
ISBN: 978-92-1-109183-0
eISBN: 978-92-1-001183-9
Print ISSN: 1995-2074
Online ISSN: 2411-8370
United Nations publication
Sales No. E.22.II.C.1
Copyright @ United Nations, 2022
All rights reserved

FOREWORD

Foreword
The world is now two years into the COVID-19 pandemic, and the end is nowhere in sight.
The human, economic and social toll of the pandemic has been devastating. Rising poverty, job losses,
shredded safety nets, health-care systems pushed to the brink, and the impacts of a changing climate are
placing the Sustainable Development Goals further out of reach.
Inequalities are intensifying, setting the stage for an uncertain, uneven and unfair recovery.
In some countries, ambitious vaccination roll-outs and bold economic support and stimulus packages
are paving the way towards recovery.
But progress is not being shared equally.
More than a quarter of developing countries have yet to achieve their pre-pandemic levels of output,
hampered by severely inadequate access to vaccines and limited financial resources. Job creation has been
insufficient to make up for earlier losses, with employment deficits disproportionally affecting women andyouth.
Against this backdrop, the risk of new COVID-19 variants emerging and spreading threatens to derail
any recovery prospects.
At the same time, rapidly rising inflation in many parts of the world will result in higher interest rates,
limiting borrowing and constraining fiscal space at exactly the time countries should be investing in jobs,
education, health care, and the green economy.
For developing countries already drowning in debt, this is a recipe for defaults and prolonged economic
distress.
In this fragile and uneven period of global recovery, the World Economic Situation and Prospects 2022
calls for better targeted and coordinated policy and financial measures at the national and international
levels.
As detailed in this report, national fiscal and monetary authorities need to carefully sequence, calibrate
and coordinate their policies to avoid sudden disruptions. Internationally, the world needs to come together
to reform the global financial system. This requires the full mobilization of governments, international
financial institutions, credit-rating agencies and others.
We must act across a wide range of challenges – from addressing illicit financial flows, to injecting
more fairness into the global tax system, and encouraging more private investment into developing countries.
We must also overhaul the international debt architecture, so developing countries can access thefinancing and debt relief they need to spur recovery in the short term and invest in resilient and sustainable
development over the longer term.
This must include investments in education systems, universal health coverage and social protection,jobs in the green, digital and care economies, and access to COVID-19 vaccines for all, so we can put the
pandemic behind us.
The time is now to close the inequality gaps within and among countries.
If we work in solidarity – as one human family – we can make 2022 a true year of recovery for people
and economies alike.
The United Nations system stands ready to work with every country to make our way through thisglobal crisis, and build the resilient, inclusive, equal and sustainable world economy that every person needs
and deserves.

António Guterres
United Nations Secretary-General

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Explanatory notes
The following symbols have been used in the tables throughout the report:...
–−

Three dots indicate that data are not available
or are not separately reported.
A dash indicates that the amount is nil or negligible.
A hyphen indicates that the item is not applicable.
A minus sign indicates deficit or decrease, except as
indicated.

.
/–

Reference to “dollars” ($) indicates United States dollars, unless otherwise
stated.
Reference to “billions” indicates one thousand million.
Reference to “tons” indicates metric tons, unless otherwise stated.
Annual rates of growth or change, unless otherwise stated,refer to annual compound rates.
Details and percentages in tables do not necessarily add to totals,
because of rounding.

A full stop is used to indicate decimals.
A slash between years indicates a crop year or financial year,
for example, 2021/22.
Use of a hyphen between years, for example, 2021–2022,
signifies the full period involved, including the beginning andend years.

For country classifications, see Statistical annex.
Data presented in this publication incorporate
information available as at 30 November 2021.
Starting in 2010, data for the Ukraine excludes the
temporarily occupied territory of the Autonomous
Republic of Crimea and Sevastopol.

The following abbreviations have been used:
APP
ASEAN
CAPE
CIS
ECB
EMU
G20
G7
GCC
GDP
ICT

Asset purchase programme
Association of Southeast Asian Nations
Cyclically Adjusted Price Earnings
Commonwealth of Independent States
European Central Bank
European Economic and Monetary Union
Group of 20
Group of 7
Gulf Cooperation Council
gross domestic productinformation and communications technology

ILO
IMF
OECD
OPEC
PEPP
PPP
S&P
UN DESAUNCTAD
WESP
WHOInternational Labour Organization
International Monetary Fund
Organisation for Economic Co-operation and Development
Organization of the Petroleum Exporting Countries
Pandemic Emergency Purchase Programmepurchasing power parity
Standard and Poor’s
United Nations Department of Economic and Social Affairs
United Nations Conference on Trade and Development
World Economic Situation and Prospects
World Health OrganizationACKNOWLEDGEMENTS

Acknowledgements
The World Economic Situation and Prospects 2022 is a report produced by the United Nations
Department of Economic and Social Affairs (UN DESA), in partnership with the United Nations
Conference on Trade and Development (UNCTAD) and Economic Commission for Africa (UNECA),
Economic Commission for Europe (UNECE), Economic Commission for Latin America and the
Caribbean (UNECLAC), Economic and Social Commission for Asia and the Pacific (UNESCAP) andEconomic and Social Commission for Western Asia (UNESCWA). The United Nations World Tourism
Organization (UNWTO) also contributed to the report. The forecasts presented in the report draw on
the World Economic Forecasting Model (WEFM) of UN DESA as well as inputs from the United Nations
regional commissions.
Under the general guidance of Liu Zhenmin, Under-Secretary-General for Economic and Social Affairs;
Elliott Harris, United Nations Chief Economist, Assistant-Secretary-General for Economic Development;
and Shantanu Mukherjee, Director of the Economic Analysis and Policy Division (EAPD); Hamid Rashid,
Chief of the Global Economic Monitoring Branch (GEMB) of EAPD led and coordinated the writing of thereport with a core team of authors from GEMB, comprising, Helena Afonso, Grigor Agabekian, Ian Cox,Andrea Grozdanic, Ingo Pitterle, Julian Rodrick Slotman, Sebastian Vergara, Yasuhisa Yamamoto andZhenqian Huang. The core team benefited from the research and analytical support from Ali Bargu,
Lennart Claas Niermann and Lea Steininger.
The contributions of Cornelia Kaldewei, Leah C. Kennedy, Poh Lynn Ng and Gabe Scelta from UN DESA;
Rachid Amui, Bruno Antunes, Regina Asariotis, Rashmi Banga, Chantal Line Carpentier, Stefan Csordas,
Cambiz Daneshvar, Marco Fugazza, Taisuke Ito, Richard Kozul-Wright, Nicolas Maystre, Alessandro
Nicita, Janvier Nkurunziza, Ralf Peters, Mesut Saygili, Miho Shirotori, Vincent Valentine, Dong Wu from
UNCTAD; Bartholomew Armah, Joseph Atta-Mensah, Jean Paul Boketsu Bofili, Hopestone Kayiska
Chavula, Adrian Gauci, Chaoyi Hu, Bosede Olanike from ECA; José Palacín Lucio from ECE; Claudio
Aravena, Sonia Gontero, Ramon Pineda, Daniel Titelman, Cecilia Vera from ECLAC; Shuvojit Banerjee,
Zheng Jian, Michal Podolski, Kiatkanid Pongpanich, Sweta Saxena, Vatcharin Sirimaneetham fromESCAP; Mohamed Bchir, Jan Gaska, Mohamed El Moctar Mohamed El Hacene, Ahmed Moummi,
Souraya Zein from ESCWA; Sandra Carvão, Michel Julian and Javier Ruescas from UNWTO; Joaquin
Salido Marcos and Susanna Wolf from UN-OHRLLS are duly acknowledged.
The report was edited by Gretchen Luchsinger, with graphic design by Mackenzie Crone and cover
design by Parvati Mcpheeters.

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Sustainable Development Goals
Goal 1. End poverty in all its forms
everywhere

Goal 10. Reduce inequality within and among
countries

Goal 2. End hunger, achieve food security
and improved nutrition and promotesustainable agriculture

Goal 11. Make cities and human settlements
inclusive, safe, resilient and sustainable

Goal 3. Ensure healthy lives and promote
well-being for all at all ages

Goal 12. Ensure sustainable consumption andproduction patterns

Goal 4. Ensure inclusive and equitable quality
education and promote lifelong learning
opportunities for all

Goal 13. Take urgent action to combat climatechange and its impacts

Goal 5. Achieve gender equality andempower all women and girls

Goal 14. Conserve and sustainably use theoceans, seas and marine resources for sustainable development

Goal 6. Ensure availability and sustainable
management of water and sanitation for all

Goal 15. Protect, restore and promote sustainable
use of terrestrial ecosystems, sustainably manage
forests, combat desertification, and halt andreverse land degradation and halt biodiversity loss

Goal 7. Ensure access to affordable, reliable,
sustainable and modern energy for all

Goal 16. Promote peaceful and inclusive societies
for sustainable development, provide access tojustice for all and build effective, accountable andinclusive institutions at all levels

Goal 8. Promote sustained, inclusive andsustainable economic growth, full and productive
employment and decent work for all

Goal 17. Strengthen the means of implementation
and revitalize the Global Partnership for
Sustainable Development

Goal 9. Build resilient infrastructure, promote
inclusive and sustainable industrializationand foster innovation

EXECUTIVE SUMMARY

Executive summary
Global growth prospects
After a strong recovery in 2021, global growth momentum islosing steam
Global economic recovery hinges on a delicate balance amid new waves of COVID-19 infections,persistent labour market challenges, lingering supply-chain constraints and rising inflationarypressures. After a global contraction of 3.4 per cent in 2020 and following an expansion of 5.5 per centin 2021, the highest rate of growth in more than four decades, the world economy is projected to growby 4 per cent in 2022 and 3.5 per cent in 2023. World gross product in 2021 was 1.9 per cent higher
than in 2019 but still 3.3 per cent below the level of output projected prior to the pandemic. These
aggregate growth figures, however, mask marked divergences in the pace of recovery across countries
and regions.
Global recovery in output in 2021 was largely driven by robust consumer spending and some uptake ininvestment. Trade in goods bounced back, surpassing the pre-pandemic level. But growth momentum
slowed considerably by the end of 2021 including in big economies like China, the European Unionand the United States of America, as the effects of fiscal and monetary stimuli dissipated and major
supply-chain disruptions emerged. Growth impetus generally has been weaker in most developing
countries and economies in transition. While higher commodity prices have helped commodityexporting countries at large, rising food and energy prices have triggered rapid inflation, particularly in
the Commonwealth of Independent States (CIS) and Latin America and the Caribbean. Recovery has
been especially slow in tourism-dependent economies, notably in the small island developing States.

Output losses relative to pre-pandemic projections willremain substantial in most developing countries
According to current forecasts, half of the world’s economies will exceed pre-pandemic levels of output
by at least 7 per cent in 2023. In East Asia and South Asia, average gross domestic product (GDP) in
2023 is projected to be 18.4 per cent above its 2019 level, compared to only 3.4 per cent in Latin America
and the Caribbean. This does not necessarily mean that countries will fully regain their output relative
to trend output growth before the pandemic. Despite a robust recovery, East Asia and South Asia’s
GDP in 2023 is projected to remain 1.7 per cent below the levels forecast prior to the pandemic. Africa
and Latin America and the Caribbean are projected to see gaps of 5.5 and 4.2 per cent, respectively,
compared to pre-pandemic projections. These persistent output gaps will exacerbate poverty andinequality and undermine sustainable development.

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The global outlook faces major uncertainties and risks
Near-term global growth prospects face major risks with the pandemic far from over. With new waves
of infections spreading quickly, the human and economic tolls are expected to increase. The growth
outlook presented in this report therefore remains susceptible to an upsurge in cases and potential
restrictions on economic activities. Limited access to vaccines poses a particular challenge to mostdeveloping countries and transition economies as a resurgence of the virus will likely affect them morethan the developed countries, which have achieved relatively high vaccination coverage. By December
2021, the number of vaccine doses per 100 people in the least developed countries stood at just
23.9 against 147.4 in the developed countries. Limited supplies of vaccines from manufacturers anddomestic fiscal constraints continue to limit access for many developing countries.
Rising inflationary pressures in major developed economies and a number of large developing countries
present additional risks to recovery. Global headline inflation rose to an estimated 5.2 per cent in 2021,
more than 2 percentage points above its trend rate in the past 10 years. The inflationary pressure wasparticularly pronounced in the United States, the euro area and Latin America and the Caribbean. A
faster-than-expected tightening of global monetary conditions represents another major challenge.
Any unexpected shifts in the monetary policy stances of the Federal Reserve in the United States
could abruptly change investor expectations and trigger large adjustments in portfolio allocations,while significantly altering capital flows to developing countries.

International trade and investment registered mixed
performance
International trade performance was mixed in 2021. Merchandise trade bounced back, with global
trade in goods surpassing the pre-pandemic level. Trade in services has remained subdued, however,as many cross-border services, particularly international travel and tourism, have yet to recover. Our
baseline scenario projects that global trade in goods and services will grow by 5.7 per cent in 2022
after an expansion of 11 per cent in 2021. Although trade in services is yet to recover, it is expected togradually improve as external demand patterns normalize. The trade outlook remains susceptible topotential restrictions in economic activities, however, with the new Omicron variant of COVID-19 posing
considerable risks and policy uncertainties.
In many parts of the world, investment has rebounded from the pandemic-induced slump, supported
by an easing of COVID-19 restrictions, large fiscal stimulus packages and ultraloose monetary policies.
After contracting by 2.7 per cent in 2020, global investment expanded an estimated 7.5 per cent in 2021,
driven by strong albeit moderating growth in China and the United States. Beyond the headline figures,
however, the global investment picture is more troubling. In many countries, the rebound is the resultof favourable base effects and an exceptionally supportive fiscal and monetary policy environment.
As financial conditions tighten and fiscal support is withdrawn, investment growth will likely return toEXECUTIVE SUMMARY

the slow pace that prevailed before the pandemic. Medium-term investment prospects are particularly
challenging for developing and transition economies that heavily depend on fossil fuels.

Labour market recovery is lagging
Employment levels are projected to remain well below pre-pandemic levels during 2022–2023 andpossibly beyond. The pace of job creation has been largely inadequate to offset earlier employment
losses although the picture varies across regions. While labour markets in developed countries aregradually improving as recovery gathers pace, employment growth in developing countries remains
weak amid lower vaccination progress and limited stimulus spending. This divergence is projected tocontinue in the near-term. In developed economies, full employment recovery is projected in 2023 orin some cases in 2024. The developing economies, especially those in Africa, Latin America and the
Caribbean, and Western Asia, are expected to see much slower recovery of jobs.

Global poverty is projected to remain at record highs
Adverse impacts of the pandemic on growth and employment have significantly undermined progresson global poverty reduction, dashing hopes of achieving the Sustainable Development Goal of ending
extreme poverty. The number of people living in extreme poverty globally is projected to decreaseslightly to 876 million in 2022 but is expected to remain well above pre-pandemic levels. Fast-developing
economies in East Asia and South Asia and developed economies are expected to experience somepoverty reduction. In contrast, poverty is forecast to further increase in the world’s most vulnerable
economies. Insufficient fiscal space and the slow recovery of employment in general will undermine
poverty reduction in many developing countries in the near term. This is particularly the case in Africa,
where the absolute number of people in poverty is anticipated to rise through 2023.

Higher inequality may emerge as a longer-term legacy of the
COVID-19 crisis
Higher levels of inequality within and between countries are emerging as a longer-term consequenceof the pandemic. For the vast majority of developing countries, a full recovery of GDP per capita willremain elusive. The gap between what they will achieve and what they would have achieved without
the pandemic will persist well into 2023. In contrast, GDP per capita in the developed economies is
expected to almost fully recover by 2023 relative to pre-pandemic projections.
Uneven recovery of employment and income across different population groups is increasing
inequalities within countries. In particular, the crisis has exacerbated the gender divide, especially indeveloping countries, where women experienced a sharper decline in employment and labour force
participation than men. Many women face serious barriers to re-entering the labour force, especiallywomen with young children. Support for unpaid domestic work, including childcare, will remain crucial

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to reversing the gender divide in the recovery of jobs. More broadly, an inclusive and sustainable
recovery will require putting gender considerations at the heart of social protection and labour market
policies.

Fiscal asymmetries are shaping recovery and development
prospects
Governments around the world will need to continue accommodative fiscal stances and avoid thetemptations of premature fiscal consolidation. This will help ensure a robust, inclusive and sustainable
recovery. Yet differences in fiscal space and structural constraints across countries will continue tolimit the ability to support pandemic-related expenditures, including vaccination, as well as to provide
relief to the most vulnerable and support the restoration of employment.
Fiscal and debt situations are extremely challenging for low-income developing countries. With very
limited fiscal space to confront the pandemic and support recovery, they are taking resources to
respond to the crisis from other critical areas, including public investment and education. Unsustainable
external debt burdens, additional borrowing during the pandemic and increasing debt-servicing costs
have put a rising number of countries on the verge of a debt crisis. They are in urgent need of further
and coordinated international support for debt relief.

Reinvigorating multilateralism is essential to confront thehealth and climate crises
Reinvigorating multilateralism will remain critical to contain the pandemic and accelerate a robust
and inclusive global recovery. Manifestly unequal access to vaccines and inadequate commitments toaddressing debt challenges, however, illustrate that multilateralism still needs to rise to the challengeof steering a recovery that is broad-based and inclusive. Stronger and more ambitious international
cooperation is an imperative to beat the pandemic, put the world back on track towards sustainable
development and pursue bold climate action.

The pandemic triggered an unprecedented monetary policy
response
Since the onset of COVID-19, countries around the world have rolled out extraordinary measures tomitigate adverse economic and financial impacts. The monetary response has broadly followed theplaybook of the 2008–2009 global financial crisis but with unprecedented speed, scale and scope.
Central banks aggressively cut short-term interest rates to increase liquidity, reduce borrowing costs
and support economic activities. But coming on the heels of a decade of monetary accommodation,
policy rates in developed economies quickly approached their effective lower bound. Developed

EXECUTIVE SUMMARY

country central banks thus relied heavily on unconventional monetary policy tools, particularly largescale asset purchase programmes (APPs), to stabilize financial markets and stimulate recovery.

Asset purchase programmes have become a primary stimulus
tool in developed countries
For many developed country central banks, APPs, often referred to as quantitative easing, have become
the primary tool for monetary stimulus during the COVID-19 crisis. Since March 2020, the central banksof Japan, the United Kingdom, the United States and the euro area have added roughly $10.2 trillion
in security assets to their balance sheets, with total assets soaring to over $25.9 trillion by the endof September 2021. Balance sheets have also risen sharply as a share of GDP. In the second quarterof 2021, total financial assets on central bank balance sheets ranged from 35 per cent of GDP in the
United States to 130 per cent in Japan.
In implementing APPs, central banks purchased long-maturity securities such as government bonds
or mortgage-backed securities from financial institutions. This provided liquidity to restore market
confidence and financial stability, lower long-term borrowing costs, boost credit flows and reduce thecost of servicing existing debt. APPs are expected to stimulate aggregate demand, employment andeconomic growth while helping central banks achieve their inflation targets.

Many developing country central banks implemented asset
purchase programmes for the first time
The pandemic saw a turning point for monetary policy in many developing countries, where central
banks introduced APPs for the first time as they confronted large capital outflows, growing risks offinancial instability and rising government financing costs. During 2020, 27 central banks – 10 in Africa,
9 in Asia and 8 in Latin America and the Caribbean – embarked on APPs. While these programmes
have been broadly modelled after those in developed economies, they mainly aimed to boost market
confidence and reduce market dysfunctionality and have been much smaller in scale and shorter induration. By the second quarter of 2021, the Reserve Bank of India was the only major developing
country central bank continuing significant asset purchases.

The programmes have been effective in addressing financial
distress and kickstarting recovery…
Empirical evidence suggests that the APPs have been generally effective in addressing financial
distress and supporting the recovery of economic activities in the early stages of the current crisis.
During both the global financial crisis and the COVID-19 pandemic, the programmes helped to stabilizefinancial markets by providing liquidity, easing financial conditions and reducing uncertainty. They also

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lowered long-term borrowing costs, supporting a rebound in investment and consumption of durable
goods and allowing countries to emerge quickly from recession.

…but the longer-term growth impacts of asset purchaseprogrammes are less clear
There is growing evidence that when normal market functioning is restored and the economy isrecovering, new purchases do not provide significant additional stimulus. The slow economic recovery
from the global financial crisis suggests that the effectiveness of central bank asset purchases may
not extend beyond the early recovery phase. Although monetary policies in developed countries
were exceptionally accommodative in the 2010s, investment failed to pick up significantly. Abundantliquidity and ultralow borrowing costs often did not stimulate bank lending to the real economy. In
some cases, ultralow interest rates and underpriced risks encouraged the emergence of “zombie firms”
with low productivity. In several countries, especially the United States, firms have been using cheap
and abundant liquidity for stock buy-backs rather than new investments. In the second quarter of2021, buy-backs among companies listed on the Standard and Poor’s (S&P) 500 index totalled $199
billion, close to an all-time high. Large-scale buy-backs have negatively affected investment and capital
accumulation and reduced firms’ abilities to cope with an economic downturn, especially if buy-backs
are increasingly funded with new debt.

Prolonged ultraloose monetary policies have createdmacroeconomic vulnerabilities
A prolonged period of ultraloose monetary policies, with central banks pumping massive amountsof liquidity into financial markets to keep long-term interest rates low, has created significant
macroeconomic and financial vulnerabilities. Large-scale APPs in developed countries have encouraged
speculative behaviour among investors, with the search for higher yields triggering a borrowing bingein some developing economies. Public and publicly guaranteed debt in low- and lower-middle-income
countries owed to private creditors rose by 264 per cent during 2010–2019, compared with a 7 percent decline from 1998–2007. Excessive external borrowing, especially from private creditors, has
exacerbated debt sustainability concerns for many developing countries.

Asset price bubbles pose a threat to financial stability
The additional liquidity from large-scale APPs has fuelled asset price inflation in virtually every asset
class, including bond, equity and real estate markets. Stock prices have recorded especially large gains
in the United States, where current valuations are approaching levels only seen prior to the burstingof the dot-com bubble in 2001. This has spurred fears of ever-expanding asset price bubbles as thedisconnect between financial markets and economic fundamentals continues to widen. If monetaryconditions were to shift abruptly, with major central banks quickly tapering asset purchases and raising

EXECUTIVE SUMMARY

policy rates, asset price bubbles would likely burst. Sharp market corrections could trigger a risingnumber of bankruptcies and inflict substantial economic damage on a fragile recovery, with adverse
global spillover effects. Financial stability concerns are compounded by the higher-risk exposure ofinvestors, as APPs have pushed market participants towards higher-yielding assets.

Higher asset prices have disproportionately benefited thewealthy
Evidence from developed countries suggests that APPs have had adverse distributional effects,
disproportionately benefiting rich households and widening wealth inequalities. Capital gains fromrising stock, bond or housing prices account for a significant share of total income for top earners,
especially the top 1 per cent, but are negligible for groups in the bottom of the income distribution.
In addition, wealthy households invest a much larger share of their portfolios in financial assets,
especially equities, which have registered the strongest price gains since the onset of the current
crisis. According to preliminary estimates, the top 1 per cent of income earners in the United States
registered net wealth gains of about $3.5 million per person between the first quarter of 2020 and thesecond quarter of 2021. The bottom 20 per cent recorded an increase of only about $5,300 per person.
The APPs also likely increased gender inequalities since women tend to have less wealth and income
than men and are less likely to invest in risky assets. These findings underscore the need for central
banks to pay attention to the distributional consequences of APPs.

Central banks face difficult trade-offs in unwinding policy
support
While concerns about higher inflation after the global financial crisis proved unfounded, developed
country central banks are now facing rising inflationary pressures. Rapid consumer price inflation fromthe strong recovery in demand and supply-side disruptions is pressuring monetary authorities to scaleback, if not unwind, their APPs. This time, the tapering of asset purchases is happening at a much
faster pace than after the global financial crisis. Unwinding and eventually exiting APPs will not beeasy. Central banks, especially the Federal Reserve and the European Central Bank (ECB), face thechallenge of scaling back bond purchase programmes without creating financial market turmoil anddestabilizing global financial flows. The risk of policy mistakes, either by withdrawing stimulus too fastor by delaying the tightening for too long, is substantial. Beyond this immediate challenge, the more
fundamental question is if – and if so, how quickly – central banks will reverse asset purchases andreduce the size of their balance sheets.

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Rapidly rising interest rates could add considerable pressure
to public finances
Debt service costs in several developed countries have become more sensitive to short-term interest
rates in part due to APPs. If interest rates were to rise more sharply and rapidly than expected, publicfinances could come under pressure, especially in countries with high debt burdens. In the UnitedStates, for example, interest expenses accounted for about 10 per cent of total government revenues
in 2020. This ratio is forecast to increase to about 14 per cent by 2030 in the baseline scenario but may
soar to 22 per cent in 2030 under a higher interest rate scenario, which could lead to difficult choiceson the expenditure side. The fiscal implications of a sudden unwinding of APPs could be equallyconsequential for developing countries, especially those with open capital accounts and high levels of
external public debt. Higher interest rates following the end of APPs could trigger large capital outflows
and further aggravate debt sustainability for many developing countries with significant levels of hardcurrency-denominated external debt. The “taper tantrum” of May 2013 serves as a reminder of theserisks.

The crisis presents an opportunity for central banks tosupport climate action
To mitigate the adverse effects of APPs and facilitate the unwinding process, a set of complementarypolicies should be put in place. Macroprudential policies can play an important role in strengthening
the resilience of the financial system. They can slow asset price growth and restrain excessive risktaking, especially in sectors that pose greater risks to the financial system. Fiscal and taxation policy
reforms can minimize the adverse side effects of APPs. More progressive income taxation, including
through levies on capital gains and taxes on corporate stock buy-backs, can help to discourage
speculative behaviour, reduce inequalities and improve macroeconomic outcomes. Finally, APPs offer
central banks an opportunity to finance climate action, mitigate climate risks and help transition to a
low-carbon economy. When unwinding their asset purchases, central banks may choose to hold on toassets of sectors and firms with lower carbon footprints. At the same time, central banks can develop
new principles and guidelines to prioritize low-carbon assets for future APPs.

EXECUTIVE SUMMARY

Regional outlook
The robust economic expansion of the United States has
slowed amid mounting inflationary pressures
In the United States, robust growth in 2021, estimated at 5.5 per cent, is forecast to decelerate to 3.5
per cent in 2022. Recovery has largely depended on domestic demand; external demand has been
weak. Rapid growth in domestic demand has faced increasing supply-side constraints due to global
supply-chain disruptions and logistics backlogs, particularly the shortage of industrial inputs, including
semiconductors. Resulting inflationary pressures are projected to persist well into 2022 given persistentlabour shortages, which may worsen if a new wave of infection takes hold. The consumption-driven
recovery will lose momentum once the effects of fiscal stimulus on household spending dissipate.
Uncertainties over the COVID-19 pandemic, mounting inflationary pressures and associated monetary
policy decisions impact economic prospects.

The economy of the European Union confronts strong
headwinds and surging inflation
The economy of the European Union returned to growth in 2021 along with the gradual easing ofcontainment measures, continuation of accommodative macroeconomic policies and a sharp
rebound in leading export destinations, particularly China and the United States. Following a 6 percent contraction in 2020, the region’s GDP grew by an estimated 4.7 per cent in 2021. The region
faced serious headwinds in the second half of the year, however, fanned by supply-chain disruptions
and shortages of workers. The automotive industry, crucially important for many European Union
countries, had to scale back production due to semiconductor shortages. In late 2021, another wave of
the pandemic prompted the reintroduction of containment measures that are disrupting many service
sector activities. Inflation in the second half of the year surged to levels not seen for years; however,the ECB, while scaling back its APP, is likely to maintain its low borrowing costs at least until early 2023.
Growth is expected to moderate to 3.9 per cent in 2022 due to the lower base effect and tapering of
ECB asset purchases but a massive recovery plan financed by joint debt issuance will likely improve
medium-term growth prospects.

China’s economy faces near-term challenges, while pursuinghigh-quality growth
China’s economy expanded an estimated 7.8 per cent in 2021, with growth projected to moderate to 5.2
per cent in 2022. Rapid recovery in the first half of 2021, driven by strong exports due to the reopeningof developed countries and robust investment, has lost momentum. The reintroduction of restrictive
measures under the “zero-COVID-19” policy has taken a toll on services and consumption while policy-

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induced property market cooling and temporary power rationing to phase out fossil fuels have weighedon investment. At the same time, the default of a large real estate firm has shaken financial markets
and confidence in the sector. The Government still has multiple policy tools to stimulate economic
activity, however, as low inflation offers room for monetary easing. A swift recovery from the pandemic
has boosted government revenues for more targeted fiscal spending. Going forward, China’s transition
towards development driven by consumption and higher-end manufacturing will lead to moresustainable but slower growth, with significant international spillover effects.

Lifted restrictions and higher commodity prices underpin
recovery in the Commonwealth of Independent States andGeorgia; economic activity rebounds in South-Eastern Europe
Economic growth resumed in the CIS area in 2021 as mobility and activity restrictions were easedor removed, domestic demand strengthened and the external environment became more favourable,
including through sharp increases in commodity prices. The aggregate GDP of the CIS and Georgia,
after shrinking by 2.6 per cent in 2020, expanded by an estimated 4.3 per cent in 2021. Growthis projected to moderate to 3.2 per cent in 2022. In small energy-importing countries, recovery inremittance flows and tourism revenues supported economic activities. Labour market conditions
improved significantly. Most of the CIS area experienced a strong upsurge in inflation in 2021, however,spurred by supply disruptions, higher food and energy prices, stronger demand and in some cases
currency depreciations. Monetary authorities in almost all countries reacted to the inflationary spikewith policy tightening. Governments have taken various measures to limit price increases and mitigate
impacts on their populations. The area’s economic outlook has multiple downside risks, such asincreased volatility in commodity prices, slow progress in vaccination against COVID-19, mounting
geopolitical tensions and rising risks in the banking sector. The broad recovery in the European Union
along with increasing tourism demand accelerated recovery of the South-Eastern European economies
in 2021. But the pace will likely weaken in 2022 as governments scale back fiscal support amid debt
sustainability concerns.

New COVID-19 waves and an uncertain policy environment
cloud Africa’s recovery prospects
In Africa, aggregate GDP is projected to expand by 4.0 per cent in 2022, slightly up from an estimated
3.8 per cent in 2021. While improving vaccination rates and terms of trade will support more robust
economic growth, the continent will remain far below its pre-pandemic output trends. Moreover, anascent recovery will remain fragile and subject to risks from recurrent waves of COVID-19 infection
as most of the region’s population remains unvaccinated. Political instability and conflict in many
subregions will further aggravate existing problems and undermine economic potential. The poverty
rate is projected to remain elevated, with an increase in the absolute number of people in extreme
poverty. For commodity exporters, higher commodity prices have provided much needed fiscal space.

EXECUTIVE SUMMARY

In contrast, tourism-dependent African countries face a much longer path to recovery. Countries acrossthe region are struggling with elevated debt burdens and rising interest payments. These will limit fiscal
space to support economic recovery and implement the 2030 Agenda for Sustainable Development,
underscoring the critical role of multilateral support, including to expedite vaccine distribution andfacilitate debt relief.

After solid economic recovery, downside risks are rising for
East Asia
East Asian economies have rebounded from the worst of the pandemic with GDP growth estimated at
6.7 per cent in 2021 after slowing to 1 per cent in 2020. Recovery is, however, still in the early stages,
and the resurgence of COVID-19 cases has disrupted prospects otherwise supported by strong policy
stimulus and external demand. More people in extreme poverty, a slow labour market recovery andrising climate risks will continue to inhibit progress on the 2030 Agenda for Sustainable Development.
Looking ahead, the region’s economic growth is forecast to moderate to 4.9 per cent in 2022 as baseeffects disappear. Weaker export demand, prolonged supply-side challenges, rising concerns around
financial instability and the possibility of a sharper-than-expected slowdown in China’s economy, allamid a lingering pandemic with new variants, pose downside risks. Containing the pandemic willremain a policy priority in the near term; macroeconomic policies should remain accommodative andtargeted to ensure an inclusive and sustainable recovery.

South Asia’s recovery gathers momentum but moreconstrained policy space and downside risks lie ahead
The recovery continues to gain momentum in South Asia amid contained COVID-19 infections andhigher mobility, robust remittance inflows and broadly supportive macroeconomic policy stances.
After an estimated expansion of 7.4 per cent in 2021, regional GDP is projected to grow at a more
moderate pace of 5.9 per cent in 2022. The recovery, however, is still fragile, uneven and subject topandemic-related uncertainties and downside risks. Labour market recovery is lagging, indicating
severe socioeconomic challenges for large segments of the population. Stalling and reversing therecent rise in poverty and inequality largely depends on achieving robust, sustained and inclusive
growth. A lasting recovery moving forward may prove challenging, however, as fiscal and monetary
policy space become more constrained and global financial conditions tighten. Policymakers will needto maintain critical support for recovery and job creation such as by prioritizing public infrastructureand green investments that crowd-in private finance.

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Uneven recovery among Western Asian economies points tofurther polarization
In Western Asia, the region’s GDP grew by an estimated 4.7 per cent in 2021 after contracting by 3.4
per cent in 2020. Economic recovery has been led mainly by growth in domestic demand. With therelaxation of pandemic control measures and progress on vaccination, economic activities showed
rapid recovery in most economies in the region in the second half of 2021. In parallel with robust
domestic demand, the unemployment rate declined towards pre-pandemic levels in Israel, Saudi
Arabia and Turkey. Employment recovery has been slower in other countries and the employment
situation remains dire in Iraq, Lebanon, the State of Palestine, the Syrian Arab Republic and Yemen. A
strong recovery is forecast to continue, mainly in oil-exporting countries given the expected increase in
crude oil production. Regional GDP growth is projected to accelerate to 4.8 per cent in 2022. Recovery
remains fragile, however, in non-oil exporting middle- and low-income countries.

Latin America and the Caribbean’s recovery is losing tractionamid fading external tailwinds and tighter macroeconomic
policies
Latin America and the Caribbean’s economy rebounded from the COVID-19 crisis amid favourable
external conditions, successful vaccine roll-outs and strong domestic policy support. After contracting
by a record 7.4 per cent in 2020, the region’s GDP grew by an estimated 6.5 per cent in 2021. But the
pandemic threatens to leave lasting scars on the region’s economies, including higher unemployment
and poverty, greater inequality and larger debt burdens. Regional GDP growth is projected to slow
sharply to 2.2 per cent in 2022 as tailwinds from higher commodity prices and buoyant demand from
China and the United States are expected to fade. At the same time, tighter monetary and fiscal policies
will weigh on domestic demand, with central banks raising policy rates to combat soaring inflation andgovernments increasingly shifting from fiscal stimulus to the consolidation of public finances. The
regional outlook remains subject to significant downside risks, including the spread of new COVID-19
variants, a sharp tightening of global financial conditions, and mounting social and political instability.
In summary, the world has emerged from the depths of a paralysing economic crisis. The recovery ineconomic output and the labour market remains uneven across countries due to large differences invaccine access and policy space. At the same time, the crisis has undermined and reversed some hardwon achievements in realizing the 2030 Agenda for Sustainable Development. The past two years haveseen sharply rising numbers of people in extreme poverty, widening gender gaps in labour markets,and escalating income and wealth inequality, within and between countries. Going forward, the fragile
recovery faces strong headwinds amid the spread of the new variants of COVID-19, persistent labour
market challenges, lingering supply-chain constraints and rising inflationary pressures. Policymakers
confront difficult policy trade-offs, as countries aim to move from a rebound in output to a robust,
inclusive and sustainable recovery. This will require better targeted and coordinated monetary, fiscal,

EXECUTIVE SUMMARY

and labour market policies, supported by new technologies. The international community needs tostrengthen and reinvigorate multilateralism to ensure equal and universal access to vaccines, address
debt challenges, and accelerate the transition towards low-carbon economies.

XIXTABLE OF CONTENTS

Table of contents
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

III

Explanatory notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

IVAcknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

V

Sustainable Development Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

VI

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

VII

Chapter I

Global economic outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

Global growth prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

The growth outlook in a pandemic world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inequality between countries is widening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The pandemic is far from over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vaccine inequities remain a formidable challenge . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rising inflation is emerging as a new risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employment, poverty and inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1
3
5
6
8
9

Labour markets are lagging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Poverty to remain at a decade high amid rising inequalities . . . . . . . . . . . . . . . . . . . .
International trade, investment and financial markets . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9
14
18

Demand recovery has buoyed international trade and commodity prices . . . . . . . . .
Global investment rebounds but structural challenges lie ahead . . . . . . . . . . . . . . . .
Global financial conditions remain highly accommodative . . . . . . . . . . . . . . . . . . . . .
A changing policy landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18
27
29
33

Fiscal asymmetries are shaping recovery and development prospects . . . . . . . . . . .
Gearing up labour market policies and social protection . . . . . . . . . . . . . . . . . . . . . .
Monetary policy: overcoming the addiction to easy money. . . . . . . . . . . . . . . . . . . . .
Multilateralism in a world of crises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

33
38
40
42

Chapter II

The monetary policy response to COVID-19: direct impacts and spillovers.

47

The global monetary response to COVID-19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47

Interest rate measures and reserve policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expanded lending and foreign exchange operations . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward guidance and asset purchase programmes . . . . . . . . . . . . . . . . . . . . . . . . .

48
49
50

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WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Page

Central banks’ large-scale asset purchase programmes . . . . . . . . . . . . . . . . . . . . . . . . . . .

51

Mechanism and transmission channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset purchase programmes in developed economies: the trillion-dollar bazooka . .
Asset purchase programmes in developing countries: a paradigm shift in monetary
policy?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Have asset purchase programmes met their objectives?. . . . . . . . . . . . . . . . . . . . . . . . . . .

51
53

Stabilizing markets during financial turmoil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fostering economic recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Providing longer-term support to economic growth . . . . . . . . . . . . . . . . . . . . . . . . . .
Side effects and risks of large-scale asset purchase programmes . . . . . . . . . . . . . . . . . .

56
59
60
63

Macroeconomic effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributional effects: making the rich richer? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spillover effects on developing countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The bumpy road ahead: looking beyond asset purchase programmes . . . . . . . . . . . . . . . .

64
72
76
78

Challenges in unwinding unconventional monetary policies . . . . . . . . . . . . . . . . . . . .
The need for complementary policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78
80

55
56

Chapter III

Regional developments and outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

82

Developed economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economies in transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83
85
87
87
95

Commonwealth of Independent States and Georgia . . . . . . . . . . . . . . . . . . . . . . . . .
South-Eastern Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Developing economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

95
100
103

Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
East Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Western Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America and the Caribbean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

103
115
127
133
139

TABLE OF CONTENTS

Page

Boxes
I.1
I.2
II.1
II.2
II.3
III.1
III.2
III.3
III.4
III.5

The COVID-19 crisis: an opportunity for information and communications
technology and digitally enabled services in small island developing
States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Strengthening the impact of Special Drawing Rights . . . . . . . . . . . . . . . . . .
Transmission channels of asset purchase programmes . . . . . . . . . . . . . . . .
Backstopping sovereign bond markets via quantitative easing – thespecial case of the euro area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greening asset purchase programmes to mitigate climate risks . . . . . . . . .
Sustainable finance in the Commonwealth of Independent States andGeorgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The quantity and quality of economic growth fosters poverty reduction in
Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal policy and financing options to build forward better . . . . . . . . . . . . .
The anatomy of the Lebanese financial crisis . . . . . . . . . . . . . . . . . . . . . . .
Healing from the pandemic: the impact of COVID-19 on labour
markets in Latin America and the Caribbean and policies to promote atransformative recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23
36
52
58
70
98
108
122
134
142

Boxes: figures
I.1.a
II.3.aIII.1.aIII.2.aIII.2.b
III.3.a
III.4.a
III.4.b
III.5.a
III.5.b

Evolution of global exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sector shares of the market portfolio, ECB holdings and emissions . . . . . .
Green bond issuance in the CIS and Georgia. . . . . . . . . . . . . . . . . . . . . . . . .
Poverty headcount rate and annual GDP growth . . . . . . . . . . . . . . . . . . . . .
Depth of poverty in Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross financing needs in selected East and South Asian countries . . . . . . .
The structure of Lebanese public debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The composition of Lebanese GDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Latin America and the Caribbean’s labour force participation rate bygender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
People in formal and informal employment and total employed, firstquarter of 2019 to fourth quarter of 2020 . . . . . . . . . . . . . . . . . . . . . . . . . .

24
71
100
108
109
122
135
135
143
144

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Page

Figures
I.1
I.2
I.3
I.4
I.5
I.6
I.7
I.8
I.9
I.10
I.11
I.12
I.13
I.14
I.15
I.16
I.17
I.18
I.19
I.20
I.21
II.1
II.2
II.3
II.4
II.5
II.6
II.7
II.8
II.9
II.10
II.11
III.1
III.2

Change from 2019 average gross domestic product . . . . . . . . . . . . . . . . . .
GDP per capita losses by development status . . . . . . . . . . . . . . . . . . . . . . .
Number of doses per 100 people. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of monthly COVID-19 related deaths by development status . . . . . . .
Fiscal stimulus and changes in working hours, 2020 . . . . . . . . . . . . . . . . . .
Growth in job openings and hires in the United States . . . . . . . . . . . . . . . . .
Labour market slack in selected European Union countries, second
quarter of 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Global number of people living in extreme poverty . . . . . . . . . . . . . . . . . . . .
Change in the number of people living in extreme poverty in developing
countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
World merchandise trade, by volume, January 2018 to September 2021 . . .
Growth in services exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International tourist arrivals and tourism receipts . . . . . . . . . . . . . . . . . . . .
Major commodity prices, January 2018 to September 2021. . . . . . . . . . . . .
Annual investment growth in selected developed economies, by asset
type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual investment growth in selected developing and transition
economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio flows to emerging market economies . . . . . . . . . . . . . . . . . . . . . .
Ten-year government bond yields in selected developed economies . . . . . .
General government gross debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
External debt stock as a share of gross national income . . . . . . . . . . . . . .
Central bank interest rate decisions, 2020 and 2021 . . . . . . . . . . . . . . . . . .
Public and publicly guaranteed external debt, by creditor . . . . . . . . . . . . . .
Central bank policy rates in developed and developing countries . . . . . . . .
Balance sheets of major developed country central banks . . . . . . . . . . . . .
Euro area GDP-weighted sovereign yields and ICE swap rates . . . . . . . . . . .
Annual growth in non-residential fixed investment in equipment andmachinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock buy-backs in the United States and the financing tools of firms thatbought back stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Base money in selected major developed economies. . . . . . . . . . . . . . . . . .
Reserves of depository institutions and growth of total loans in the UnitedStates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset valuation changes and asset composition in the United States andEurope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income and asset composition in the United States and Europe . . . . . . . . .
Growth of wealth across income groups in the United States . . . . . . . . . . .
Capital flows to G20 developing countries . . . . . . . . . . . . . . . . . . . . . . . . . .
The contribution of demand components to GDP growth in the UnitedStates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Labour market indicators in the United States . . . . . . . . . . . . . . . . . . . . . . .

2
3
6
7
10
12
13
15
16
19
21
22
26
28
29
31
32
34
35
41
45
49
55
57
61
63
65
66
68
73
74
77
83
84

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Page

III.3
III.4
III.5
III.6
III.7
III.8
III.9
III.10
III.11
III.12
III.13
III.14
III.15
III.16
III.17
III.18
III.19III.20III.21
III.22
III.23

Inflation trends in Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economic sentiment indicator for the European Union and the euro area .
Annual change in the Harmonized Index of Consumer Prices for selectEuropean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross public debt-to-GDP ratio for select European countries . . . . . . . . . . .
Changes in benchmark monetary policy rates in the CIS and Georgia since
January 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real GDP growth in Africa by subregion . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real GDP in Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COVID-19 vaccination rates by world region (as of 20 December 2021) . . . .
Government borrowing as a share of GDP . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demand-side contributions to growth in select East Asian countries . . . . .
Vaccination progress in East Asia (as of 20 December 2021) . . . . . . . . . . .
Inflation and inflation targets in East Asia . . . . . . . . . . . . . . . . . . . . . . . . . .
Growth of real GDP from 2019 to 2022, based on projections made in
2022 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Asia’s vaccination progress (as of 20 December 2021) . . . . . . . . . . .
GDP growth in select South Asian countries . . . . . . . . . . . . . . . . . . . . . . . . .
Public debt over GDP in select South Asian countries . . . . . . . . . . . . . . . . .
Recovery forecast for Western Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vaccination progress in Western Asia (as of 20 December 2021) . . . . . . . .
Vaccination progress in Latin America and the Caribbean (as of 20
December. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unemployment rates in select Latin American countries . . . . . . . . . . . . . . .
Central bank policy rates in select Latin American countries . . . . . . . . . . . .

86
89

140
142
146

Growth of world output and gross domestic product, 2020-2023 . . . . . . . .
Changes in quarterly gross fixed capital formations . . . . . . . . . . . . . . . . . .

4
69

91
92
97
104
104
105
111
116
117
120
121
128
129
130
133
136

Tables
I.1
II.1

XXV

XXVI

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Page

Statistical annex
Country classifications
A
B
C
D
E
F
G
H
I
J

Developed economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economies in transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Developing economies by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fuel-exporting countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Economies by per capita GNI in July 2021 . . . . . . . . . . . . . . . . . . . . . . . . .
Least developed countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Heavily indebted poor countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Small island developing States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Landlocked developing countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Organization for Standardization of Country Codes . . . . . . .

153
153
154
155
156
157
157
158
158
159

Annex tables
A.1
A.2
A.3
A.4
A.5
A.6
A.7
A.8
A.9
A.10
A.11

Developed economies: rates of growth of real GDP . . . . . . . . . . . . . . . . . .
Economies in transition: rates of growth of real GDP . . . . . . . . . . . . . . . . .
Developing economies: rates of growth of real GDP . . . . . . . . . . . . . . . . . .
Growth of world output and gross domestic product by SDG regions . . . .
Developed economies: consumer price inflation . . . . . . . . . . . . . . . . . . . .
Economies in transition: consumer price inflation . . . . . . . . . . . . . . . . . . .
Developing economies: consumer price inflation . . . . . . . . . . . . . . . . . . . .
Selected economies: real effective exchange rates, broad measurement .
Free market commodity price indices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
World oil supply and demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
World trade: Changes in value and volume of exports and imports, bymajor country group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance of payments on current accounts, by country or country group,summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net ODA from major sources, by type . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net ODA flows from OECD Development Assistance Committee
countries, by type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and net flows of financial resources, by selected
multilateral institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

163
164
165
169
170
171
172
176
178
179

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187

A.12
A.13
A.14
A.15

180
182
183
184
185

CHAPTER IGLOBAL ECONOMIC OUTLOOK

1Global economic recovery from the COVID-19 pandemic hinges on a delicate balance amid new

Global growth is graduallyconverging to its longterm trend

CHAPTER I

Global economic outlook
Global growth prospects
The growth outlook in a pandemic world
waves of infection, labour market challenges, lingering supply-side constraints and rising inflationarypressures weighing heavily on near-term growth prospects. The global economy grew by 5.5 per centin 2021 – the highest growth rate since 1976 – after contracting by 3.4 per cent in 2020. World grossproduct in 2021 was 1.9 per cent higher than in 2019 but still 3.3 per cent below the level projected
before COVID-19. The recovery of output in 2021 largely represented the resumption of householdspending and investment, which had come to a screeching halt in 2020 amid lockdown measures
worldwide. The world economy is projected to grow by 4 per cent in 2022 and 3.5 per cent in 2023,
converging towards its long-term trend of around 3 per cent per year between 2010 and 2019. But theseaggregate figures mask strong divergence in growth prospects as a significant number of developing
countries are struggling to recover from the pandemic.
The projected growth rates for 2022 mark a small upward revision from the forecasts in the World
Economic Situation and Prospects 2021, even as significant downside risks emerged during the fourth
quarter of 2021 (table I.1). The growth momentum of the first three quarters of 2021 – especially in
the United States, the European Union and China – slowed as the stimulating effects of fiscal andmonetary measures began to dissipate and supply-side challenges emerged at the end of the year.

Easing supply-side
disruptions andcontaining inflation are
crucial to support global
growthThe easing of supply-side constraints and the taming of inflationary pressures will remain critical tokeep the global economy on the projected near-term growth trajectory. Growth prospects, however,face significant risks and uncertainties, including new mutations of COVID-19, such as the Omicron
variant that began spreading in late November 2021. Growth forecasts presented in this report remain
susceptible to potential lockdowns and other restrictive measures worldwide. In addition, as major
central banks start to withdraw their extraordinary policy support, global financial conditions may
tighten considerably, weighing on global recovery.
According to current forecasts, the gross domestic product (GDP) of 16 hard-hit developing countries– including many small island developing States – will be more than 5 per cent smaller in 2022 thanin 2019.1 Well over a fifth of developing countries, 28 in total, will have to wait until 2022 to see GDP
return to pre-crisis levels. Twenty or nearly a fifth of developing countries will still be below their 2019

1

The GDPs of the Bolivarian Republic of Venezuela and Lebanon will be more than 30 per cent smaller than before
the pandemic. These sharp contractions are due to domestic economic fragilities compounded by the impact ofthe pandemic.

Output losses relative to
pre-pandemic projections
will remain substantial indeveloping countries

2WORLD ECONOMIC SITUATION AND PROSPECTS 2022

output levels by the end of 2023. On the other hand, by 2023, more than half of the world’s economies
will exceed their 2019 output levels by at least 7 per cent. In East and South Asia, average GDP in 2023
is projected to be 18.4 per cent above its 2019 level, compared to only 3.4 per cent in Latin America andthe Caribbean (figure I.1). But this does not mean that countries will regain lost output. In fact, despite
the robust recovery, East and South Asia’s GDP in 2023 is projected to be 1.7 per cent below the level
forecast prior to the pandemic. Africa and Latin America and the Caribbean are expected to see lossesof 5.5 and 4.2 per cent, respectively, compared to pre-pandemic projections.

Figure I.1

Change from 2019 average gross domestic product
Percentage
20

15

10

5

0

-5

Source: UN DESA estimates andforecasts.
Notes: Africa excludes Libya;
Latin America and the Caribbean
excludes the Bolivarian Republic ofVenezuela.

-10

2020

2021

2022

Developed economies

Developing Asian economies

AfricaLatin America and the Caribbean

2023

GLOBAL ECONOMIC OUTLOOK

3

A full economic recovery measured in terms of GDP per capita will remain elusive for developing

The recovery of GDP per
capita across developed
and developing countries
is uneven

CHAPTER I

Inequality between countries is widening
countries in the near term. In 2022, the per capita output of developing countries and economies
in transition is projected to be more than 2 per cent below the level expected prior to the pandemic.
The GDP per capita gap between what they will achieve and what they could have achieved without
the pandemic will persist well into 2023 (figure I.2). On the other hand, the GDP per capita of thedeveloped economies is projected to almost fully recover by 2023 relative to pre-pandemic projections.
The uneven pace of recovery between developed and developing countries will widen income inequality
across countries and make it all but impossible to reduce global inequality by 2030, as targeted in the
global Sustainable Development Goals.

Figure I.2

GDP per capita losses by development status
Percentage change between current and pre-pandemic forecasts
2021

2022

2023

0

-0.5

-1.0

-1.5

-2.0

-2.5

-3.0

-3.5

-4.0
Developed economies

Economies in transition

Developing economies

Source: UN DESA estimates andforecasts.

4WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table I.1

Growth of world output and gross domestic product, 2020-2023
Change from WESP 2021
Annual percentage change

2020

2021a

2022b

2023b

2021

2022

World

-3.4

5.5

4.0

3.5

0.8

0.6

Developed economies

-4.8

4.8

3.7

2.5

0.8

1.1

United States of America

-3.4

5.5

3.5

2.4

2.1

0.8

Japan

-4.6

2.2

3.3

2.7

-0.8

1.5

European Union

-6.0

4.7

3.9

2.6

-0.1

1.2

Euro area

-6.5

4.7

4.0

2.5

-0.3

1.4

United Kingdom of Great Britian andNorthern Ireland

-9.8

6.2

4.5

2.0

-0.6

2.5

Other developed countries

-3.3

4.0

3.7

2.7

-1.0

1.5

Economies in transition

-2.6

4.4

3.2

2.9

1.0

0.2

South-Eastern Europe

-3.1

6.2

4.0

3.6

2.2

0.9

Commonwealth of Independent Statesand Georgia

-2.6

4.3

3.2

2.8

0.9

0.2

-3.0

4.2

2.7

2.3

1.2

0.3

-1.6

6.4

4.5

4.7

0.8

0.0

Russian Federation
Developing economies

-2.2

3.8

4.0

3.6

0.3

0.4

-2.4

4.8

4.8

2.8

-0.1

0.7

East Africa

1.3

4.0

4.8

5.7

1.0

0.7

Central Africa

-2.4

2.0

3.3

3.5

-0.9

-0.3

Africac

Northern Africa c

West Africa

-0.8

3.2

3.7

4.0

0.7

0.1

Southern Africa

-6.2

2.9

2.6

2.9

0.1

0.0

East and South Asia

0.0

6.8

5.0

5.4

0.4

-0.2

East Asia

1.0

6.7

4.9

5.4

0.3

-0.3

China

2.3

7.8

5.2

5.5

0.7

-0.6

South Asiad

-4.7

7.4

5.9

5.6

0.5

0.6

d

-7.1

9.0

6.7

6.1

1.7

0.8

Western Asia

-3.4

4.7

4.8

3.5

0.8

1.4

Latin America and the Caribbean

-7.4

6.5

2.2

2.5

2.7

-0.3

-7.0

6.7

1.6

2.4

2.9

-1.1

India

South America

-4.1

4.7

0.5

1.9

1.5

-1.7

Mexico and Central America

Brazil

-8.2

6.1

3.4

2.7

2.3

1.0

Caribbean

-7.2

3.2

11.5

3.7

-0.6

8.7

Least developed countries

0.8

1.4

4.0

5.7

-3.5

-0.6

World tradee

-8.3

11.0

5.7

4.0

4.0

1.9

World output growth with PPP weightsf

-3.3

5.6

4.2

3.8

0.7

0.4

Memorandum items

Source: UN DESA.
Notes: (a) estimated, (b) forecast, (c) excludes Libya, (d) growth rates are on a calendar year basis (for fiscal year growth figures, please refer to the statistical annex),(e) includes goods and services, and (f) based on a 2015 benchmark.

CHAPTER I

5

GLOBAL ECONOMIC OUTLOOKThe pandemic is far from overDespite the roll-out of vaccines from early 2021, the COVID-19 pandemic is far from over. From 1 April
through 1 December 2021, an average of 9,432 people died every day around the world, significantly
higher than the 6,061 deaths per day recorded during the same period in 2020.2 By early December
2021, COVID-19-related deaths since the start of the pandemic had reached 5.2 million. Yet the total
number of deaths directly and indirectly attributable to the pandemic is much higher. Excess deaths
have been highest in some economies in transition and a number of Eastern European and Latin
American countries.3
Over 2021, the epicentre of the pandemic shifted multiple times. For much of the year, developing
and transition countries saw a growing share of infections and deaths as they lagged in vaccination.
But in the fourth quarter of 2021, as colder temperatures in the Northern Hemisphere led to moreindoor social activities, Europe and the United States began to experience new outbreaks, with severe

The emergence of a moretransmissible and deadly
COVID-19 variant poses amajor risk...

cases mostly affecting the unvaccinated. Countries in Europe with relatively lower vaccination rates
have experienced stronger increases in cases. Moreover, the emergence in late November 2021 of theOmicron variant, which is likely to be more transmissible than earlier variants and with a better ability
to evade vaccines, sounded new alarm bells across the world. Governments from major developed
countries, including in Europe, Japan and the United States, responded by introducing travel restrictions
from Southern Africa4 where Omicron was first detected. A number of developing countries also swiftly
imposed entry restrictions on travellers from Southern Africa.
New COVID-19 variants and the reintroduction of quarantine and mobility restrictions could significantly
restrain economic activities. Although the actual impact is impossible to assess in advance, newvariants could severely impair market confidence and derail economic recoveries. The willingness
to work in person could decline again, posing downside risks to an already slow recovery of labour
markets and intensifying supply-chain disruptions. The long-awaited recovery of service industries,
from hospitality to international travel and conferences, could also be further postponed. Efforts topush ahead with reopening and attract tourists in tourism-dependent countries, particularly the small
island developing States, could be easily reversed.

2
3
4

According to the COVID-19 Data Repository at John Hopkins University (last accessed 21 December 2021).
See The Economist’s COVID-19 tracker (accessed on 14 December 2021).
The list of countries included Angola, Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa
and Zimbabwe.

...with potentiallysignificant impacts on
economic activity

6WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Vaccine inequities remain a formidable challenge
Access to COVID-19 vaccines remains a challenge in many developing countries and transition
economies, driven in many cases by fiscal constraints. By the end of 2021, the number of doses
per 100 people in the least developed countries stood at just 23.9, against 147.4 in the developed
countries (figure I.3). In most developing countries, acute vaccine shortages – as opposed to vaccine
hesitancy – continue to prevent higher vaccination coverage, leaving these countries highly vulnerable
to renewed waves of infection. Unsurprisingly, the concentration of deaths due to COVID-19 shiftedfrom developed to developing countries through much of 2021 (figure I.4), yet a few major developed
countries, such as the United States, still experienced among the highest numbers of deaths per
100,000 people.

Figure I.3

Number of doses per 100 people

200
175
150
125
100
75
50
25

1-Jun-21

1-Dec-21

a
in
Ch

it
of ed
Am Staer tes
ic
a
Eu
ro
p
Un ea
io n
n

Un

ld
or
W

Source: UN DESA, based on datafrom Our World in Data (accessedon 20 December 2021).

D
ec eve
on lo
om pe
ie d
s
E
in co
tr no
an m
si ie
tio s
De n
ec ve
on lop
om in
Le
ie g
as
s
td
ev
co el
un op
tr ed
i
Sm es
de allve isllo a
St pin nd
at g
es

0

CHAPTER I

7

GLOBAL ECONOMIC OUTLOOK

Figure I.4

Share of monthly COVID-19 related deaths by development status
Percentage
100

80

60

40

20

Ap 0
r20
ay
-2
Ju 0
n2
Ju 0
l2
Au 0
g2
Se 0
p2
Oc 0
t2
No 0
v20
De
c2
Ja 0
n2
Fe 1
b2
M 1
ar
-2
Ap 1
rM 21
ay
-2
Ju 1
n2
Ju 1
l2
Au 1
g2
Se 1
p2
Oc 1
t2
No 1
v21

-2

M

b-

M

Fe

ar

20

0

Developed economies

Economies in transition

Developing economies

Progress in vaccination was critical to resume economic activities and recover output in 2021.
Countries with high vaccination rates managed to ease restrictions, allowing demand to surge andeconomic growth to come back more quickly. Low vaccination rates and recurring waves of infection in
many developing countries, on the other hand, demanded continued restrictions. If they had achieved

Source: UN DESA, based on datafrom Johns Hopkins University.

Uneven progress invaccination imposeslarge economic costs
globallylevels of vaccination similar to those in high-income countries, low-income countries could have raised
output in 2021 by $38 billion or 8 per cent of their collective GDP (UNDP, 2021).5 Vaccination is clearlya necessary condition for reopening economies but not a sufficient condition for accelerating growth
and recovery. Many other factors, including public and private investments to improve labour markets
and create jobs, will also determine the size and pace of recovery.
This report’s baseline scenario assumes sufficient progress in vaccination to allow the lifting ofrestrictions on economic activities and obviate the need for new restrictions during the forecast horizon.
It remains particularly crucial to scale up vaccination in developing countries to restore confidence andboost aggregate demand. This will, however, remain contingent on accelerating vaccine deliveries.
COVAX, the global vaccine distribution initiative, announced in September 2021 that it aims to ship
2 billion doses by the end of the first quarter of 2022. Achieving this target would yield a fully vaccinated5

Further, the global GDP loss from not vaccinating people in all countries, relative to a counterfactual of global
vaccinations, is higher than the cost of manufacturing and distributing vaccines worldwide (Cakmakli and others,2021).

Export controls andprioritization of bilateralagreements continue toaffect access to vaccines
in developing countries

8WORLD ECONOMIC SITUATION AND PROSPECTS 2022

coverage rate of about 35 per cent. As of early December 2021, however, only about 610 million doses
had been shipped. The COVAX target faces significant uncertainty amid the export controls of major
suppliers, the prioritization of bilateral agreements over COVAX and regulatory approval processes(COVAX, 2021).
The Group of 20 (G20) summit in Rome in October 2021 affirmed the clear imperative of vaccinating
at least 40 per cent of the population in all countries by the end of 2021 and 70 per cent by mid-2022,
in line with WHO’s global vaccination strategy. The G20 will need to take urgent measures to boost
the supply of vaccines in developing countries and mitigate relevant supply and financing constraints.

Rising inflation is emerging as a new risk
Global inflation increased
significantly in 2021...

Global inflation largely remained restrained, often below central bank targets, in the past decade,despite massive increases in global liquidity after the 2008–2009 global financial crisis. Global headline
inflation surged to an estimated 5.2 per cent in 2021, however, more than 2 percentage points above
its trend rate in the past 10 years. The rise was particularly pronounced in the United States and theeuro area, and in Latin America and the Caribbean. Medium-term market-implied inflation expectations
over a five-year period in the United States and the euro area increased slightly throughout 2021 but
remained moderate, below 2.5 and 1.8 per cent, respectively (IMF, 2021d). This would suggest that
inflation expectations remain well anchored and should allow inflation to return to its pre-pandemic
rates if labour shortages and supply-side bottlenecks dissipate and global food and energy prices
stabilize in 2022.

...amid supply-side
disruptions, the release ofpent-up demand and highcommodity prices

The rise in inflation in 2021 was largely due to a unique combination of idiosyncratic supply-sidebottlenecks, a stronger-than-anticipated rebound of demand and high commodity prices. Commodity
prices surged, with steep increases in metals, coal, crude oil and natural gas. Crude oil prices roseby 70 per cent to $70 per barrel on average. The drivers of escalating energy prices included highelectricity demand caused by hot weather in some countries, low renewable energy production due tounfavourable weather conditions and high energy demand overall (World Bank, 2021a). Food prices
shot up by 22 per cent in 2021, reaching their highest level in a decade, spurred by sharp increases invegetable oil, cereal and dairy prices (FAO, 2021). High food prices hurt the consumption of the poor,
whose situation is already very strained. Underlying drivers encompassed reduced harvests due toadverse weather, labour shortages and high consumption demand. Major supply bottlenecks and port
congestion raised shipping costs and led to higher import prices.
In 2022, some upward pressure on prices is expected to ease as central banks tighten monetary policy. The
timing and sequencing of central bank responses to inflationary pressures will remain critical, however. If
monetary policy stances are tightened too quickly, they will inevitably derail recovery. On the other hand,
if monetary tightening and normalization are delayed for too long, inflation expectations may become
entrenched and self-fulfilling. Major central banks will need to coordinate and clearly communicate their
responses to inflationary pressures to ensure financial market stability and support recovery.

GLOBAL ECONOMIC OUTLOOK

9Under the baseline scenario, the global headline inflation rate is forecast to fall to 3.8 per cent in 2022

Inflationary pressures areprojected to graduallyease throughout 2022

CHAPTER I

and 3.1 per cent in 2023, returning to its pre-pandemic trend. These forecasts are contingent on thedissipation of the supply-chain disruptions plaguing the global economy by the second half of 2022.
Renewed restrictions due to new COVID-19 variants could translate into higher inflationary pressures,
however. In addition, climate change has increased the frequency and severity of extreme weather
events, which may also adversely affect supply chains and cause upward pressures on prices.

Employment, poverty and inequality
Labour markets are lagging
Global employment has yet to fully recover from the unprecedented shock of the COVID-19 pandemic,
despite the gradual lifting of lockdown restrictions, immense efforts to protect employment andsupport businesses, and the rebound in global output. While aggregate output in 2021 returned to
pre-pandemic levels in most major economies, the recovery of employment lagged and even stalled in

Global output recovered
but employment remains
well below pre-pandemic
levelsmany parts of the world. According to the International Labour Organization (ILO), by the third quarterof 2021, total working hours remained 4.7 per cent below pre-pandemic levels, equivalent to the loss of
137 million full-time jobs (ILO, 2021d). The sluggish speed of job creation cannot compensate for earlier
employment losses particularly in sectors hit hardest by the pandemic. New waves of infection, forexample in Europe and the Commonwealth of Independent States (CIS), are forcing the reintroductionof partial lockdowns and slowing job recovery, especially in the services sector.
The crisis has had a devastating impact on employment in tourism, hospitality, travel and retail trade.
It has disproportionately affected vulnerable groups, including youth, women and migrant workers, aswell as workers with lower educational attainment and skills. Exacerbation of the gender divide isevident, especially in developing countries, with women seeing greater declines in employment andlabour force participation than men (IMF, 2021d). Currently, many women confront serious barriers
to re-entering the labour force, especially women with young children (Fabrizio and others, 2021).
Supporting unpaid domestic work, including childcare, as well as reopening schools will be crucial inreversing gendered labour outcomes going forward.
In countries able to implement large-scale fiscal stimulus measures, mechanisms to protect businesses
and jobs helped mitigate fallout from the crisis on employment (figure I.5). The ILO finds that, on
average, a 1 per cent increase in annual GDP in the fiscal policy response is associated with a 0.3
percentage point increase in working hours (ILO, 2021d). The Organisation for Economic Co-operation
and Development (OECD) estimates that without government-funded job retention schemes, the fall in
the number of employees would have been 50 per cent larger, resulting in a decline in employment of
more than 6 per cent (OECD, 2021a). Specific stimulus programmes, such as the Paycheck Protection

Income support andjob retention schemes
prevented larger
downturns in labour
markets

10

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Program in the United States and the Australian JobKeeper Payment programme, have had significant
positive impacts in preventing larger job losses.6
Institutional settings have determined different strategies to mediate impacts on employment. In the
United States, substantial income support accompanied a rise in unemployment, while in European
countries, furlough and short-time work schemes allowed a reduction in working hours. In the longterm, countries that experienced higher unemployment will be more likely to suffer from a long-lasting
decline in labour force participation but may eventually see a more efficient redeployment of labour(Bartholomew and Diggle, 2021).

Figure I.5

Fiscal stimulus and changes in working hours, 2020
Fiscal spending as a percentage of GDP
0

5

10

15

20

25

30

5

Source: UN DESA, based on datafrom the ILO and the IMF World
Economic Outlook database,
October 2021.
Note: Changes in working hours
are based on ILO modelled
estimates.

Change in working hours due to the COVID-19 crisis, percentage

NZL

0
NER

FIN

POL

ZMB

CHE

SWE CHN NOR
SRB
BGR
GHA DNK
TUN-5SEN
MUS IDN
FRA
ROU
BEL
SAU
ETH
UZB
ALB
EGY
GNB
MMR
MKD
-10
KAZ
ESP
BGD
POR
ITA
MEX

TUR ZAF
IND

-15

PHL

THA
DEU

JPN

AUS

SGP

CAN

USA
GBR

CHL
BRA

COL

-20

HND

ARG

-25

6

The Paycheck Protection Program increased employment by 2 million jobs (about a 3 per cent increase) between
April and June 2020 (Autor and others, 2020). The JobKeeper programme reduced total employment losses byat least 700,000 positions between April and July 2020 (Bishop and Day, 2020). Andrews and others (2021) point
to the importance of measures being temporary, targeted and adaptive as economic conditions change. They
highlight that it is not only size but also policy design that matters.

CHAPTER IGLOBAL ECONOMIC OUTLOOK

11

A notable divergence has emerged between developed and developing economies in part due touneven progress in vaccination and the size of fiscal stimulus packages. In 2021, employment largely
recovered in developed countries. While the rise in working hours in the euro area and Japan reflected
workers taking on more hours at the same firms where they were previously employed, in the UnitedStates it was associated with lower unemployment rates (Shin, 2021). By contrast, employment growthin developing countries stalled; some countries continued to experience employment losses.7 Jobs inthe informal sector in developing countries were hit hard as job retention programmes only protected
the formal sector. This divergence in employment outcomes between developed and developing
countries is projected to widen in the near term given the faster growth of the working-age populationin developing countries and more limited fiscal space to support recovery.
Although headline unemployment rates moderated in 2021 and further reductions are expected in
2022, especially in developed economies, the figures are less representative of actual labour market
conditions as millions of prospective workers remain outside the labour force. In 2020, 81 million
workers globally became inactive compared with 33 million who moved to formal unemployment

Fear and discouragement
are keeping many
workers from rejoining
the labour force(ILO, 2021c). Currently, many workers are reluctant to return to work because of health concerns.
Employment numbers also do not reflect large variations in incomes, skill mismatches, and job quality
and satisfaction levels. In developing economies, a precise assessment of unemployment is further
complicated by rising informality. In addition, the slow job recovery is weighing on the quality of humancapital as workers lose skills or skills become obsolete, which may contribute to increases in structuraland long-term unemployment and lead to a higher youth employment gap.
Among developed economies, the United States has been steadily adding jobs since early 2021,
including in the most affected sectors, such as travel, leisure and hospitality. The unemployment
rate declined from 8.1 per cent in 2020 to 5.6 per cent in 2021 and is projected to subside further in
2022. Yet the labour market remains more than 6 million jobs short relative to pre-pandemic levels(Furman, 2021). Further, the labour force participation rate remains well below pre-crisis levels at
about 61.6 per cent. It is especially low for individuals aged 55 or older and those without a college
education. Paradoxically, the United States is facing an acute shortage of workers, with job openings
increasing significantly and hires largely stable since the end of 2020 (figure I.6). As the recovery
gathers momentum, shortages may gradually subside, but the reluctance to return to work, especiallyamong low-pay workers who left employment in massive numbers in 2021, could delay the process.
In the medium term, implementation of a massive infrastructure plan may lead to higher demand forworkers and further improvement in labour markets.
In Europe, labour market conditions in 2021 varied significantly (figure I.7). Unemployment rates fell to
low single-digit levels, around or below 3 per cent, in the Czech Republic, Germany and Poland, while
unemployment rates remained elevated in Greece, Italy and Spain. Despite supply-side disruptions andthe resurgence of COVID-19 cases in some countries by the end of 2021, labour demand is expected to

7

Between the fourth quarter of 2020 and the third quarter of 2021, the deficit in working hours in high-income
countries decreased from 5.4 per cent to 3.6 per cent over pre-pandemic levels. In the same period, the gap inworking hours in low-income countries expanded from 3.7 per cent to 5.7 per cent (ILO, 2021d).

Enormous labour
shortages affect labour
markets in both theUnited States and Europe

12WORLD ECONOMIC SITUATION AND PROSPECTS 2022

strengthen in the near term as service sectors gradually return to full activity. Manufacturing output has
recovered, and firms are attempting to expand output to deal with massive backlogs of earlier orders.
This is subject to the evolution of new virus variants and mobility restrictions, however. European
countries are also facing massive labour shortages that are causing significant logistical bottlenecks.
At the same time, many workers remain furloughed, which complicates an accurate assessment oflabour utilization rates. As furlough schemes are phased out, workers may not necessarily be employedin their previous jobs and may be unwilling to seek employment in sectors with worker shortages.

Figure I.6

Growth in job openings and hires in the United States
Percentage
8

7

6

5

4

3

-2
Ap 0
r2
M 0
ay
-2
Ju 0
n2
Ju 0
l2
Au 0
g2
Se 0
p2
Oc 0
t2
No 0
v2
De 0
c2
Ja 0
n2
Fe 1
b2
M 1
ar
-2
Ap 1
r2
M 1
ay
-2
Ju 1
n2
Ju 1
l2
Au 1
g2
Se 1
p21

20

ar

M

b-

Fe

n-

20

2

Ja

Source: UN DESA, based on datafrom the United States Bureau ofLabour Statistics.
Note: The job openings rate iscomputed by dividing the numberof job openings by the sum of
employment and job openings;
the hires rate is computed by
dividing the number of hires by
employment.

Job openings

Hires

CHAPTER IGLOBAL ECONOMIC OUTLOOK

13

Figure I.7

Labour market slack in selected European Union countries, second quarter of 2021
Percentage

30
30

25
25

20

15
15

10
10

55

hi

a

nd

Cz

ec

la
Po

y
an
rm
Ge

Eu

ro
p
Un ea
io n
n

ce
ee
Gr

ly
Ita

Sp

ai

n

0
0

Unemployed

Available to work but not seeking it

Seeking work but not immediately available

Underemployed part-time workers

Although unemployment rates remain above pre-pandemic levels, certain sectors are experiencing
massive labour shortages, especially in Australia, Canada, European countries and the United States(United Nations, 2021b). Two factors help to explain this situation. First, despite the gradual recoveryof labour markets, many available jobs appear to be low quality and/or poorly paid and thus areunattractive. In OECD countries, the persistent increase in “domestic outsourcing”, which means
contracting out work to another company in the same country, is one reason explaining the increase in
low-pay jobs with mediocre working conditions (OECD, 2021a).
Second, the pandemic triggered a large-scale labour reallocation shock, especially in developed
economies, altering both labour demand and supply. Demand for certain professions, such as in
information technology, data analysis, project management and numerous other occupations, has
strengthened during the pandemic. Demand for construction and travel-related workers, street vendors
and medium-skilled clerks crumbled. Changes in the pattern of labour demand were accompanied byshifts in the labour supply. Many workers abandoned their jobs over safety considerations or becauseof pay dissatisfaction. Some opted for retirement earlier than planned or began looking for better andmore stable positions.

Source: UN DESA, based on datafrom Eurostat.

Unattractive job offerings
and labour market
uncertainties help explain
labour shortages

14WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Many developing
countries face theprospect of long-lastingslack in labour markets

Among developing regions, unemployment remains precariously high in Latin America and the
Caribbean, often at double digits. In 2021, most job recovery took place in the large informal sector,
which suffered the bulk of job losses. To address growing working poverty, including food insecurity,
governments extended social protection programmes to informal workers, such as in Argentina, Brazil,
Peru and the Plurinational State of Bolivia. While growth has recovered, registered unemployment rates
may continue to increase as some workers who dropped out of the labour force early in the pandemic
gradually start to look for jobs (ECLAC, 2021a). In most of sub-Saharan Africa, fiscal space remains
severely constrained to supporting job growth. In the third quarter of 2021, unemployment in South
Africa reached 34.9 per cent, the highest rate in the world. In comparison, employment in the RussianFederation has almost returned to its pre-pandemic level, with the unemployment rate below 5 percent since early 2021. Unemployment in China has fallen since early 2020 and was back to the prepandemic level by mid-2021.

The recovery of labour
markets in developing
countries is not expected
before 2023

Labour market conditions in developed economies are expected to improve but a full employment
recovery is projected only in 2023. For low-income countries, this may be as far out as 2024. In Africa,
Latin America and the Caribbean, and Western Asia in particular, lasting slack in labour markets
calls for continued fiscal support and active labour market policies. The outlook is marred, however,by uncertainties associated with the pandemic and the effectiveness of policies to revitalize job
creation. Many longer-term impacts of the pandemic on employment, such as the accelerated paceof automation, the reconfiguration of supply chains and offshoring, and teleworking, are not yet fully
understood.

Poverty to remain at a decade high amid rising inequalities
The COVID-19 pandemic has significantly increased poverty and inequality globally, causing asubstantial reversal in progress towards sustainable development. According to estimates by theUnited Nations Department of Economic and Social Affairs, progress in reducing extreme poverty has
been set back by several years in most countries. Botswana, Kenya, Morocco and Samoa are among
the countries that have lost up to a decade’s worth of poverty eradication efforts. Developed countries,
in contrast, were mostly able to support household incomes and even reduce the number of people
in poverty through strong transfer and social protection programmes. Even wider gaps in prosperity
levels among world regions may be one of the lasting legacies of the crisis.

The number of extremely
poor people may remain
at record highs in the
coming years

An unprecedented 85 million more people entered extreme poverty in 2020 globally.8 The number is
projected to remain well above pre-pandemic levels for the next several years, likely at record highs
for the last decade (figure I.8). Only slight declines are expected in 2022, to about 876 million people.
Fast-developing economies in East and South Asia as well as developed economies will likely see
a reduction in poverty in the near term. But it is anticipated to increase further in the world’s mostvulnerable economies. In Africa, home to almost 70 per cent of the world’s extremely poor people, the8This figure is comparable to the latest World Bank estimates, which showed that the number of people in extreme
poverty increased by 77 million from 2019-2020 and by 97 million relative to pre-pandemic projections (Gerszon
Maler and others, 2021).

CHAPTER IGLOBAL ECONOMIC OUTLOOK

15

absolute number of people in poverty is projected to rise through 2023 (figure I.9). This will take place
amid rapidly growing populations, weak income growth and limited fiscal space. In sub-Saharan Africa,high rates of multidimensional poverty are expected to amplify pandemic-related shocks in educationand employment (UNDP and OPHI, 2021).
Poverty projections are subject to major uncertainties, though. The economic outlook could easily
worsen with a more transmissible and deadly COVID-19 variant or new waves of infection, especiallyin countries with low vaccination rates. In addition, the capacity to reduce poverty will be largely
constrained by insufficient fiscal space across the developing world, the slow recovery of employment
in some countries and tightening global monetary conditions. Extreme weather, conflicts and politicalfragility could also further affect poverty prospects.

Figure I.8

Global number of people living in extreme poverty
Millions
920
900
897
889

880

876
860

868

865
848

840

840

835

820

818

812

800

Source: UN DESA.
Note: Estimates were derived using
the latest growth forecasts fromthe World Economic Forecasting
Model. Extreme poverty refers to$1.90 per day (in 2011 PPP).

780

23
20

22
20

21
20

20
20

19
20

18
20

17
20

16
20

15
20

20

14

760

16

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure I.9

Change in the number of people living in extreme poverty in developing countries
Percentage
25
41 mil57 mil20
15
10

280 mil
480 mil
15 mil5
19 mil0

Conditions for fasterpoverty reduction haveworsened

2020

2021

2022

Am
Ca an errib d t ica
be he
an

tin
La

C
Ge IS a
or nd
gi
a

ia
rn
te
es
W

So

Ea

ut

h

st

As

As

ia

ia
As

ric

-10

a

-5

Af

Source: UN DESA.
Note: Estimates derived using
the latest growth forecasts fromthe World Economic Forecasting
Model. Extreme poverty refers
to $1.90 per day (in 2011 PPP).
Numbers above the bar represent
the number of people living in
extreme poverty in 2020.

2023

Projections suggest that poverty reduction rates have returned to the pre-pandemic pace of 2-4 percent per year. This is too slow to eradicate extreme poverty by the global goal of 2030, however, barring
major changes in global economic conditions, such as another commodity supercycle boosting growthin commodity-dependent developing economies. Most developing countries experienced structuralinvestment challenges in the previous decade, leading to relatively low growth and insufficient
reduction in poverty rates, as in Africa and Latin America and the Caribbean. If anything, conditions
for significant poverty reduction have deteriorated, including through greater informality, higher public
debt and persistent slack in labour markets.

People on lower incomes
globally face a larger hit
from the pandemic

The COVID-19 pandemic is increasing inequalities between and within countries, amid disparities inunemployment rates and shares of labour income in developed and developing economies. In the firsttwo quarters of 2021, global labour income fell by 5.3 per cent. About 108 million workers are now
extremely and moderately poor, a vast majority of them in developing countries (ILO, 2021e). Further,
the pandemic has taken a harsher toll on those at the bottom of the income distribution. While average
incomes of people in the bottom 40 per cent of the global income distribution were estimated to be 6.7
per cent lower in 2021 compared to 2019, those of people in the top 40 per cent were down only 2.8 percent (Sanchez-Paramo and others, 2021). Divergent employment prospects between developed anddeveloping countries will likely prevent major reductions in inequality across countries in the near term.

GLOBAL ECONOMIC OUTLOOK

17

Asymmetric impacts on employment and income between population groups are increasing inequality

The pandemic is
exacerbating prepandemic divergences in
job conditions

CHAPTER I

within countries.9 The divide between high-skilled and low-skilled occupations continues to grow. Thisis due not only to different levels of pay and benefits and varying degrees of employment vulnerability
but also crucially to the ability to work remotely.10 Many low-skilled workers face more hazardous
working conditions in front-line sectors, such as retail, catering, health care and personal care services,which are associated with high risks of COVID-19 exposure. The pandemic has accelerated the ongoing
disappearance of medium-skilled jobs, further contributing to the increasing polarization of incomes.
In 2020, global employment decreased the most for medium-skilled workers (-4.7 per cent), followed
by low-skilled workers (-3.3 per cent) and high-skilled workers (-1.3 per cent), compared to 2019 (ILO,
2021d).
The pandemic has worsened prospects for a dramatic loss in human capital and the most dire education
crisis in a century for developing countries. This is due to prolonged school closures, lasting up to 250
days, or in some cases, with schools yet to reopen. Poor learning outcomes have resulted despite
government efforts to deliver remote learning. The share of 10-year-olds in developing economies who
cannot read a basic text has reached an estimated 70 per cent, an increase of 17 percentage points
from 2019 (World Bank, 2021d). Without robust, large-scale plans to recover these losses, the effects
of delayed education will likely be felt for decades, widening inequality between and within countries,
especially for girls.
Other pre-pandemic transformations in work, such as rising precarity, pose significant challenges.
The pandemic sped up expansion of the gig economy, where workers are often classified as selfemployed rather than employees. While expanding livelihood opportunities, this trend will preclude
more workers from collective bargaining, including for basic benefits such as paid sick leave andaccess to unemployment insurance. Amid shrinking fiscal space and the phasing out of social
protection measures, the withdrawal of fiscal support could further increase inequality within countries
by adversely affecting the most vulnerable workers.

910

The trajectories of stock markets in developed economies also point to rising inequalities within countries. Since
the start of the pandemic, stock prices have surged to unprecedentedly high levels, leading to large increases in
wealth for the richest segments of the population.
The digital divide aggravates inequalities. Even for those professions where telecommuting is feasible, insufficient
access to the Internet and inadequate digital infrastructure remain impediments to remote work in many countries,
especially in rural areas. While over 95 per cent of the population in Denmark, Norway and the Republic of Korea
used the Internet in 2020, the figure was only 35 per cent in Sri Lanka and 11 per cent in Chad.

An increase in learning
poverty in developing
countries will have longterm repercussions

18

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

International trade, investment and financial
markets
Demand recovery has buoyed international trade andcommodity prices
A divergent recovery in trade flows
Recovery of goods
trade beat expectation
but services trade hasremained subdued

International trade performance was mixed in 2021. Merchandise trade was stronger than expected,
with global trade in goods surpassing pre-pandemic levels (figure I.10a). Strong demand for pandemicrelated goods such as medical supplies and goods related to lifestyle changes such as electronic
devices buoyed merchandise trade in the first half of the year. In the second half, however, supply-chain
challenges amid labour shortages in Europe and the United States and new waves of COVID-19 slowed
growth. Trade in services remains subdued as the COVID-19 pandemic lingers; many countries have
yet to fully reopen their borders.

The pandemic weighson the outlook forinternational trade…

World trade is expected to continue improving, fuelled by stronger demand as more countries reopenand restart productive activities. The baseline scenario projects that global trade in goods and services
will grow by 5.7 per cent in 2022 after an expansion of 11.0 per cent in 2021. Risks to forecasts are stillon the downside, however. The pandemic remains the largest risk, particularly if more transmissible
and deadly variants take hold and disrupt economic activities. Trade tensions, including unresolved
ones between China and the United States, and between the European Union and the United Kingdom,11
could weigh on trade flows. Although trade in services could strengthen due to the normalization ofpatterns of demand, with the relative increase in demand for durable goods expected to shift back,services could stabilize along a lower trajectory if the impact of the pandemic turns out to be longlasting (UNCTAD, 2021d; WTO, 2021).

11

Trade tensions between the European Union and the United Kingdom intensified during 2021, particularly over the
Northern Ireland Protocol to the Brexit Withdrawal Agreement, which prevents checks along the border between
Northern Ireland (in the United Kingdom) and the Republic of Ireland (in the European Union). This could impose
border checks within the United Kingdom when goods flow to Northern Ireland from other parts of the country.

CHAPTER I

19

GLOBAL ECONOMIC OUTLOOK

Figure I.10

World merchandise trade, by volume, January 2018 to September 2021(a) World merchandise trade(b) Advanced economies: exports(c) Emerging economies: exports

Index, 2010 = 100

Index, 2010 = 100

Index, 2010 = 100

135

150

130

After years of low
inflation, consumer
prices increase

170
130

125

150
120

110
130

115
90

110

110
70

18

20

19

21

20

20

19

21

20

20

18

20

20

20

21

19

20

20

20

18

20

20

20

90

100

20

105

Euro area

China

United Kingdom

Eastern Europe/CIS

Advanced Asia excl Japan

Africa & Middle East

United States

Emerging Asia excl ChinaJapan

Latin America

Other advanced economies

Source: CPB Netherlands Bureau for Economic Policy Analysis, World Trade Monitor database (accessed on 3 December 2021).
Note: Regional groupings are not strictly comparable to those in the World Economic Situation and Prospects 2022 but illustrate regional tendencies.

Ongoing supply shortages and network disruptions will continue to be a drag on global merchandise
trade in the near term. Although they are expected to recede over time, their duration and severity are
uncertain. Supply-chain constraints are likely to persist in 2022 for several reasons. First, businesses
usually do not hold excessive inventory to avoid additional storage costs, which means that producers
and retailers may not effectively respond to consumer demand swings due to renewed waves of
COVID-19 infection. Second, industry consolidation and dependence on key manufacturers contributeto supply-chain chokepoints. For instance, in 2021, strong demand for semiconductor-related goods
and disruptions in the output of some major producers increased delivery times12 and constrained
output in related industries, particularly car production.

12

The average delivery time of semiconductors increased from 12 weeks in early 2020 to more than 20 weeks in July
2021 (King, 2021).

…along with unresolved
supply-side constraints

20WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Third, possible renewed virus waves as well as extreme weather events could keep costs of shippinghigh and disrupt operations at a few critical international container ports,13 impeding the growthof merchandise trade. During the pandemic, misallocation of containers led to a significant rise inshipping costs, which increased sevenfold from an average of $1,446 per container at the end of 2019
to above $10,000 in September and November 2021.14 The recovery in energy prices also contributed tohigher rates. New virus variants could prolong bottlenecks in international shipping, resulting in delays
and further cost hikes. Furthermore, labour shortages, ageing infrastructure, a lack of warehouse
abilities at ports as well as shortages of truck drivers in key destination countries have increased port
congestion, which is still not fully resolved.

The rebound in exports
has been particularly
strong in China and other
Asian economies

While global merchandise trade has recovered to the pre-pandemic level, there is clear regional
divergence (figure I.10). Rebounds in goods exports are more evident in China and other developing
Asian countries. Given China’s strict virus containment measures and policy stimulus, its factories
continued to operate at full capacity in the first half of 2021 and managed to increase exports tomeet recovering demand in developed countries. Strong demand from developed countries as well as
China buoyed trade performance in several other Asian and Latin American economies. In contrast,
merchandise trade in the United Kingdom, Africa and the Middle East has remained subdued. For theUnited Kingdom, the weakness reflects trade disputes with the European Union. For Africa and the
Middle East, the agreement by the Organization of Petroleum Exporting Countries Plus (OPEC+) to
reduce oil production has largely suppressed exports. Contingent on the evolution of COVID-19, such
geographical variations are expected to recede over time as more countries reopen and resume local
productive activities.
Although trade in services has seen weaker performance than trade in goods, it is expected togradually improve as external demand patterns normalize. Services trade registered positive growth in
the second quarter of 2021 across regions but from a low base (figure I.11). During 2021, the global
Services Purchasing Manager’s Index expanded, recently edging up for both developed and developing
countries after a slowdown due to the Delta wave of COVID-19.

13
14

Disruptions to maritime transport and port operations have also triggered a humanitarian crew-change crisis.
Hundreds of thousands of seafarers have been unable to leave ships, remaining stranded at sea far beyond theexpiration dates of their contracts (UNCTAD, 2021b).
Freightos Data (accessed on 6 November 2021).

CHAPTER I

21

GLOBAL ECONOMIC OUTLOOK

Figure I.11.

Growth in services exports(a) By region(b) By main service category, world

Year-on-year growth, percentage

Year-on-year growth, percentage
80

80

60

60

40
40

20

20

0
-20

0

-40
-20
-60
-40

-80

Latin America and the Caribbean
EuropeServices
Transport
Other services

21
Q1

20

20
Q3

20

20
Q1

20

19
Q3

20

19
Q1

20

18
20
Q3

Q1

20

21
Q1

20

20
Q3

20

20
Q1

20

19
Q3

20

19
Q1

20

18
Q3

20

18
20
Q1

World
Northern America
Asia and Oceania

18

-100

-60

Goods-related services
TravelSource: UNCTADStat (accessed on 6 November 2021).
Note: On panel (a), there are no data for Africa.

International tourism experienced a modest improvement in the third quarter of 2021, underpinned byreopening mostly in Europe and the Americas. This was due to progress in vaccination and the resulting
relaxation of travel restrictions. From January to September 2021, however, international tourist arrivals
were 20 per cent below levels in 2020 and 76 per cent below levels in 2019 (UNWTO, 2021a). Despite
an important rebound projected in 2022, driven by unleashed demand, international tourism is unlikely
to return to the pre-pandemic level in the near term. As figure I.12 shows, international tourist arrivals
plunged by 73 per cent in 2020, dropping to levels of several decades ago. Further restrictive measuresand limits on non-essential travel due to new variants could cause a significant setback to the recovery
of tourism-dependent economies, in particular the small island developing States.15

15

Tourism revenues in the small island developing States declined by $43 billion in 2020, a 70 per cent drop in
nominal terms. This represents 43 per cent of the total decline in the exports of goods and services in thesecountries.

International tourism
is still well below the
pre-pandemic level22WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure I.12

International tourist arrivals and tourism receipts
1600

1,466
Global financial crisis (2009)
Arrivals: -37 million (-4%)
Receipts: -$80 billion (-4%) a

1400

1,466
1,270

SARS (2003)
Arrivals: -2 million (-0.4%)
Receipts: +$48 billion (-2%) a

1200

1,149

1000

800

COVID-19 (2020)
Arrivals: -1.1 billion (-73%)
Receipts: -$930 billion (-64%) a

673
530

600

533

438
496

400

401

418
200

271

Targeted trade policies
can mitigate pandemic
impacts

International tourist arrivals (millions)

20
20

15
20

10
20

05
20

95

00
20

19

Source: UNWTO.
Note: (a) Real percentage change(local currencies, constant prices).

19

90

0

International tourism receipts (billions of US dollars)

While the global trade outlook is subject to downside risks, appropriate and targeted policy measures
could help mitigate these. There is a clear need for multilateral efforts to address on-going tradetensions and ensure “vaccines for all”. Negotiations under the 12th World Trade Organization Ministerial
Conference16 are expected to put forward a strong global response to the pandemic and provide afoundation for more rapid and equitable vaccine production and distribution.
In addition, there is an acute need for tourism-dependent countries to find alternative revenue sources.
Some are developing domestic and rural tourism,17 which could simultaneously help local economies
in rural and depressed areas to boost job creation and protect natural resources and cultural heritage,
while empowering women, youth and indigenous peoples. For small island developing States, expanding
information and communications technology (ICT) and digitally enabled services could open economic
opportunities (box I.1). Amid ongoing trade tensions and supply-chain disruptions, many countries

16
17

The 12th World Trade Organization Ministerial Conference, scheduled to take place from 30 November to 3
December 2021, was postponed due to the emergence of the Omicron variant. Negotiations on the response to
the pandemic are still going on with a call for agreement by the end of February 2022.
Domestic tourism proved its resilience in 2021. While international air traffic was down by 82 per cent fromJanuary to October 2021, compared to 2019 levels, domestic traffic tapered off by 31 per cent, according to theInternational Air Transport Association.

CHAPTER IGLOBAL ECONOMIC OUTLOOK

have also started to shift production closer to consumers. The European Union and the United States
have announced ambitious plans to boost domestic production of semiconductors.

Box I.1

The COVID-19 crisis: an opportunity for information and communications technology
and digitally enabled services in small island developing States
The COVID-19 pandemic triggered the largest drop in economic output since the Great Depression.
Yet ICT and digitally enabled services have exhibited strong resilience since they allow individuals
and businesses to operate remotely (figure I.1.a). Developing ICT and digitally enabled services has
emerged as an important opportunity for small island developing States to move towards a postpandemic recovery. This could potentially help them improve virtual connectivity to markets andenhance tourism-related services, which could at least partially offset massive losses from reduced
exports of travel services. Economic losses in tourism due to the pandemic led Jamaica’s economy tocontract by 11 per cent in 2020. Fiji’s GDP declined by 19 per cent in 2020, with unemployment rising
to 35 per cent and government revenue shrinking by 40-50 per cent.
A number of small island developing States have developed ICT and digitally enabled services, both
before and during the pandemic. In 2019, exports of ICT services reached 30.7 per cent of GuineaBissau’s services exports. During the pandemic, Samoa developed a payment system called MauaPay
to connect domestic and international banking systems and facilitate international trade in goods andservices. In Vanuatu, drones were used to deliver childhood vaccinations to remote areas (ITU, 2019).
Several Caribbean countries built a partnership with a hospital in Canada to provide digital healthservices to help children suffering from cancer.
Small island developing States still face multiple challenges, however, in leveraging ICT services as
an engine for growth and development. Small domestic markets and a limited number of suppliers
compound a lack of awareness and inability to fully use available tools such as online maps andstreaming services. The latter is partly due to the absence of relevant local online content in local
languages. Taking advantage of the recent paradigm shift to move personal data storage to the cloudis complicated by requirements for more data usage and the fact that small island developing States
have higher connection costs than most countries.
Improving digital infrastructure, such as through submarine cables connecting to the Internet via opticalfibre, has brought cheaper and faster access compared to the more costly and slower alternatives ofsatellite transmission and microwave radio. Many small island developing States lag behind, however.
Plans to develop submarine cable access have not progressed in Kiribati, Nauru, Timor-Leste andTuvalu, for instance (Johnson, 2021). Since costs could be substantial, countries may need to seek
financing from various sources such as private companies and multilateral development banks.

23

24

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure I.1.a

Evolution of global exports
Index, 2011 = 100
240

200

160

120

80

Source: Elaboration based on
UNCTADstat (accessed in October2021).

Developing:

ICT services
Digitally delivered services
Travel services
Goods

Developed:

20
20

19
20

18
20

17
20

16
20

15
20

14
20

13
20

12
20

20

11

40

ICT services
Digitally delivered services
Travel services
Goods

Small island developing States could also develop tourism-related digital services, such as to enhance
travel intermediaries. Some studies show that a substantial amount of money spent by tourists is notretained by local businesses or workers but ends up leaving countries via foreign-owned tour operators,
airlines, hotels, and imported drinks and food. Such “tourism leakage” is estimated to amount to about
80 per cent of all money spent by tourists in the Caribbean (WTTC, 2017). Countries could establish
and manage online travel platforms that usually take a commission of 15–18 per cent of the price of ahotel room or 3–4 per cent of airfares (The Economist, 2017).
Authors: Dong Wu, Vincent
Valentine and Bruno Antunes,
United Nations Conference on
Trade and Development

While the pandemic has hit small island developing States disproportionately, ICT and digitally enabled
services could help them overcome geographical remoteness. Reliable, fast and affordable connectivity
through enhanced digital infrastructure, platforms and services has significant potential. It can help
SIDS recover, diversify their economies and make progress towards sustainable development.

CHAPTER I

25

GLOBAL ECONOMIC OUTLOOKCommodity prices rise amid strong demand and supply-side disruptions
Prices of almost all commodity products trended upward in 2021.18 Demand for commodities
accelerated in tandem with sizeable policy stimulus and vaccine-led reopening plans. The supply side
was slower to catch up due to the resurgence of COVID-19, extreme weather events and logistical

Commodity prices haveincreased across theboard…

problems. Overall, the commodity price index of the United Nations Conference on Trade andDevelopment increased by 30 per cent in the first nine months of 2021 (figure I.13a). Rising prices
coupled with supply-side disruptions increased inflationary pressures in different parts of the world
throughout 2021.
Looking forward, a modest and gradual decrease in commodity prices is expected. While the factorsthat drove up prices will gradually dissipate in 2022, there is rising downward pressure on prices.
OPEC+ members could loosen supply restraints on oil production while monetary tightening in the
United States and a potential slowdown in China’s growth could also ease global demand. In the
coming years, a global green energy transition could bring mixed impacts on commodity prices as
demand will decline for fossil fuels but accelerate for key minerals for electric vehicles and green
infrastructure, such as copper and lithium (UNCTAD, 2021d).
Fuel price hikes have taken the lead across all commodity groups (figure I.13b). The OPEC+ agreement
on unprecedented crude oil production cuts in early 2020 brought the price above the pre-pandemic
level. In October 2021, the West Texas Intermediate spot price of crude oil crossed $80 per barrel,
a seven-year high. Higher oil prices have increased inflationary pressures in oil-importing countries
such as Brazil, India and Singapore, which could trigger additional monetary policy tightening andcause a setback to recovery. While OPEC+ is phasing out production cuts to meet recovering demand,
major oil producers remain reluctant to unleash spare production capacity due to COVID-19 related
uncertainties.
Prices of minerals, ores and metals have also bounced back to pre-pandemic levels. After prices
reached an all-time peak in July 202119 due to recovering demand, however, mining disruptions inAustralia, Chile and Peru as well higher shipping costs and disruptions in logistics sent prices down. In
2022, prices are expected to moderate further as global demand shifts from goods to services.

18
19

All commodity prices increased in 2021 except for precious metals. Prices of precious metals moderated in 2021
after reaching an all-time high in August 2020. This was driven by changing demand for gold, perceived as a safe
haven in times of crisis and uncertainty.
The UNCTAD minerals, ores and non-precious metals price index began in January 1995. The reading in July 2021
was the highest since that point.

…but are expected to
weaken26WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure I.13

Major commodity prices, January 2018 to September 2021(a) UNCTAD commodity price index, all groups(b) UNCTAD commodity price subindices

Index, 2019 = 100

Index, 2019 = 100

140

180

130

160

120

140

110

120

100

100

90

80

80

60

70

40

1

21
p-

-2

Se

21
M

ay

20

nJa

0

p-

-2

Se

20
M

ay

19

nJa

9

p-

-1

Se

19
M

ay

18

nJa

8

p-

-1

18
n-

ay
M

Ja

1

21
p-

-2

Se

21
M

ay

20

nJa

0

p-

-2

Se

20
n-

ay

19

M

Se

All food

Agriculture raw minerals

Fuels

Minerals, ore and non-precious metals

Precious metals

Source: UNCTAD.

Surging food prices
threaten food security in
low-income countries

Ja

9

p-

-1

Se

19
n-

M

ay

18

Ja

8

Se

-1

18
n-

ay
M

Ja

p-

60

Food prices rose in 2021 given lower elasticity of demand along with unfavourable weather conditionsfor key agricultural commodities such as soybeans, sugar and cereals.20 Disruptions in supply
chains and logistics networks increased transport costs. Higher fuel prices also boosted the costsof agricultural inputs and drove up the prices of grains and oilseeds. While food prices appeared tostabilize in the third quarter of 2021, they had increased nearly 20 per cent since the end of 2020. Lowincome countries have been particularly vulnerable as surging food prices feed inflation and threaten
food security. The Food and Agriculture Organization and World Food Programme (2021) warn that
continued high food prices could undercut food access in many countries, including Afghanistan, theBolivarian Republic of Venezuela, Haiti, Liberia, Nigeria and Sierra Leone.

20

Adverse weather conditions linked to La Niña severely affected grain production in South America and the UnitedStates towards the end of 2020 and into 2021.

CHAPTER IGLOBAL ECONOMIC OUTLOOK

27

Global investment rebounds but structural challenges lie
ahead
In many parts of the world, investment has rebounded from the pandemic-induced slump, supported
by an easing of COVID-19 restrictions, large fiscal stimulus packages and ultraloose monetary policies.
After contracting by 2.7 per cent in 2020, global investment expanded an estimated 7.5 per cent in
2021.
The recovery has been driven by strong albeit moderating growth in China and the United States, which
together accounted for almost 50 per cent of gross fixed capital formation in 2021. In the United States,
gross fixed investment rose by 9 per cent in the first three quarters of 2021. Amid strong monetaryand fiscal policy support and buoyant consumer demand, investment in machinery and equipment andintellectual property products soared (figure I.14). Investment growth is projected to moderate in 2022
as sentiment indicators have softened in recent months and the Federal Reserve is shifting to a lessaccommodative policy stance. The recently passed Infrastructure Investment and Jobs Act, however,will provide a boost to public investment over the coming years. The $1.2 trillion package includes
about $550 billion in new spending, which will be spread over five years.21
In China, strong export performance and government stimulus buoyed investment in manufacturing
and real estate in the first half of 2021. Yet investment growth slowed in the second half of the year
as the Government restarted restrictions in line with its “zero-COVID-19” policy and implemented
measures to curb the property market. Investment nevertheless is expected to remain an engine of
economic growth in the coming years. While the construction boom is likely to end, targeted fiscal
policies, including tax incentives and subsidies, will support investment in innovation and technologicalupgrading as well as in green industries.

21

Since annual fixed investment is about $4 trillion, additional spending of $110 billion would provide a stimulus of
about 2.5 per cent.

Macroeconomic stimuli
have contributed tostrong investment growth28WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure I.14

Annual investment growth in selected developed economies, by asset type
Percentage
15

10

5

0

-5

-10

Strong investment growth
may not last as the policy
landscape changes

United States

United Kingdom

Euro area

Residential

Machinery and equipment

Non-residential construction

Intellectual property products

2021 Q1-Q3

2020

2010-20191998-2007

2021 Q1-Q3

2020

2010-20191998-2007

2021 Q1-Q3

2020

2010-20191998-2007

2021 Q1-Q3

2020

2010-2019

Source: UN DESA, based on datafrom CEIC and EuroStat.
Note: Figures are in constantprices. Data for the United
Kingdom, euro area and Japanare total investment; data for
the United States are private
investment.

1998-2007

-15

Japan
Total

Beyond the headline figures, the global investment picture is more troubling. In many countries, the2021 rebound did not signal sustained improvement in investment conditions but primarily resulted
from favourable base effects and exceptionally supportive fiscal and monetary policies. As financial
conditions tighten and fiscal support is withdrawn, investment growth will likely return to the slow pacethat prevailed before the pandemic (figure I.15). In some cases, investment performance may worsen
as the crisis has reinforced structural obstacles to investment such as the lack of skilled workers.

A low-carbon transition
weighs on the investment
prospects of fossil fueldependent countries

Medium-term investment prospects are particularly challenging for developing and transition
economies that heavily depend on fossil fuels. In fact, despite the sharp rise in oil and gas prices overthe past year, investment in many large fossil fuel producers has been slow to recover. As the worldtransitions towards net-zero carbon emissions, these countries face massive economic and financial
losses. Comprehensive plans are therefore needed to ensure that investment promotes economic
diversification towards new low-carbon technology sectors. In addition, the issue of stranded assets

CHAPTER I

29

GLOBAL ECONOMIC OUTLOOK

needs to be addressed.22 A recent study estimates that fossil fuel assets worth $11 trillion to $14
trillion could become worthless by 2036 (Mercure and others, 2021).

Figure I.15

Annual investment growth in selected developing and transition economies
Percentage
25
20
15
10
5
0
-5
-10
-15
-20

1999 – 2007

2020

M

ex

ic

o

il
az

Fe

Br

ra
iA
ud
Sa

2011 – 2019R
de uss
ra ia
tio n
n
So
ut
h
Af
ric
a

bi

a

ey
rk
Tu

a
di
In

bl
Ko i c o
re f
a
In
do
ne
si
a

Re

pu

Ch

in

a

-25

2021 eSource: UN DESA, based on datafrom national authorities.
Note: e = estimates.

Global financial conditions remain highly accommodative
Exceptionally accommodative global financial conditions largely supported the recovery of output while
maintaining short-term financial stability and keeping financial market volatility relatively contained
throughout 2021. Financing conditions for businesses remained largely favourable and corporate
balance sheets generally strengthened (Standard and Poor’s, 2021). Corporate bond issuance wasstrong as firms took advantage of the favourable funding environment. Bond spreads for investment
grade and high-yield issuers in developed countries narrowed further in 2021 and remain close to all22

Stranded assets comprise investments, infrastructure, equipment, contracts and know-how that suffer fromunforeseen or premature write-downs or devaluation due to the energy transition. See World Economic Situation
and Prospects 2020 for a discussion on coping with stranded fossil fuel assets (United Nations, 2020).

Loose global financial
conditions havesupported economic
recovery...

30WORLD ECONOMIC SITUATION AND PROSPECTS 2022

time lows. At the same time, unprecedented policy support that included massive injections of liquidity
provided by the major central banks in developed countries has resulted in excessive risk-taking and afurther build-up of financial vulnerabilities.
With inflationary pressures rising quickly, a growing number of central banks in both developed
and developing countries have started tightening their monetary policy stances or signalled theirintention to do so. With shifts in monetary policy, global financial conditions are expected to tighten
substantially in 2022. The move away from ultraloose financial conditions poses significant risks forthe full recovery of the world economy, amid record levels of private and public debt and elevated asset
prices. Developing countries with elevated external debt, insufficient international reserves and large
current account deficits and external financing needs are particularly vulnerable to a sharper-thanexpected tightening of financial conditions.

…but may not sufficiently
benefit low-income
countries

Net capital flows to emerging markets and developing countries remained moderate throughout 2021,
although large emerging economies recorded sizeable inflows of portfolio capital, especially in thefirst half of the year (figure I.16). Foreign direct investment inflows rebounded more quickly than
expected, driven by cross-border infrastructure investment, especially in the power sector (UNCTAD,
2021a). This allowed most central banks to build up foreign exchange reserves. But trends in different
asset categories diverged (IMF, 2021d). While hard currency debt issuance and equity flows recovered,cumulative local currency debt flows since January 2020 (excluding China) are still negative. Many lowincome countries have not benefited from benign global financing conditions. According to UNCTAD(2021a) estimates, foreign direct investment flows to low-income countries further declined in the firsthalf of 2021.

CHAPTER I

31

GLOBAL ECONOMIC OUTLOOK

Figure I.16

Portfolio flows to emerging market economies
Billions of United States dollars
100
80
60
40
20
0
-20
-40
-60
-80

Se

p1
Oc 9
t1
No 9
vDe 19cJa 19nFe 20
bM 20
ar
-2
Ap 0
rM 20
ay
Ju 20
n2
Ju 0
lAu 20gSe 20p2
Oc 0
tNo 20vDe 20cJa 20nFe 21
bM 21
ar
-2
Ap 1
rM 21
ay
Ju 21
n2
Ju 1
lAu 21g21-100

Equity flows

Source: Institute of International
Finance.

Debt flows

The prospect of the gradual withdrawal of monetary support has pushed up longer-term government
bond yields in developed economies from a very low base (figure I.17). Yield spreads among major
economies are projected to further widen as monetary policy paths diverge. In fact, while the emergenceof the Omicron variant of COVID-19 has added a fresh bout of uncertainty, the Federal Reserve andthe Bank of England are expected to tighten monetary policy relatively sooner and more aggressively
than the European Central Bank and the Bank of Japan. Rising expectations of a faster-than-expectedadjustment by the Federal Reserve have also pushed up the value of the dollar. The dollar index, whichmeasures the value of the dollar against the currencies of six developed countries, increased by 7
per cent between January and November 2021, which shows persistently strong global demand for
dollar-denominated assets. The dollar may appreciate even further if monetary conditions in the UnitedStates tighten, which will make the servicing of dollar-denominated external debt costlier for many
developing countries and present significant challenges to debt sustainability.

Tighter financial
conditions may trigger
market corrections
and undermine debt
sustainability

32WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure I.17

Ten-year government bond yields in selected developed economies
Percentage
4

3

2

1

0

Sources: Federal Reserve,
European Central Bank andinvesting.com.

United States
Germany

21
Oc

t-

21
1-

1-

Ju

l-

21
rAp
1-

Ja

n-

21

20
1-

1-

Oc

t-

20
1-

Ju

l-

20
rAp
1-

1-

Ja

n-

20

19
Oc

t-

19

US recession

1-

Ju

l-

19
1-

rAp
1-

1-

Ja

n-

19

-1

Japan
United Kingdom

The combination of low interest rates in developed countries, abundant global liquidity and prospectsof economic recovery has resulted in lower volatility across asset classes. This has boosted risk
appetite among investors, leading to a broad increase in the prices of risky assets. As a result, equity
markets recorded significant gains in 2021. In the United States, for example, the major stock indicesreached record highs. While this was also supported by strong earnings and rising profit margins, stock
prices in the United States and several other countries appear to be significantly overvalued relative
to long-term trends and fundamentals, exacerbating fears of market corrections in response to tighter
financial conditions. An abrupt tightening of financial conditions could create large negative spillover
effects for developing countries, including capital outflows and depreciation of domestic currencies,
as experienced during the 2013 “taper tantrum”.

CHAPTER IGLOBAL ECONOMIC OUTLOOK

33

A changing policy landscapeFiscal asymmetries are shaping recovery and development
prospects
The pandemic underscored the critical importance of fiscal policy for fighting a catastrophic crisisand supporting recovery. Proactive fiscal policies or the lack thereof are playing decisive roles in how
countries are managing the pandemic, mitigating its impacts and supporting recovery. Yet enormous

Proactive fiscal policies
are essential to mitigate
the pandemic

fiscal asymmetries and financing gaps across countries are leading to profound differences invaccination progress, financial support to firms and households, and economic recovery prospects. Whiledeveloped countries have deployed large fiscal packages, developing countries, especially low-income
countries, struggle with enormous fiscal challenges. Many are at risk of a sovereign debt crisis. Thisfiscal and financing divide is contributing to sharply divergent prospects for recovery and, at the sametime, preventing effective containment of the pandemic and endangering economic recovery globally.23
In developed countries, massive fiscal stimulus packages have played a crucial role in containing
the crisis and supporting ongoing recovery (Gourinchas and others, 2021). Loose monetary policy
and expanded central bank balance sheets have allowed governments to borrow at low costs while

Fiscal stimulus packages
are supporting recovery
in developed countries

reducing debt-servicing costs and rollover risks. As the pandemic becomes more contained, priorities
are shifting towards strengthening social protection and supporting long-term investments andproductive capacities, such as in green energy and digital technologies, and enhanced research anddevelopment. Examples include the Next Generation EU recovery plan in the European Union and theInfrastructure Investment and Jobs Act in the United States.
Policymakers need to resist the temptation of a premature fiscal consolidation as previous crises
have proven such a step to be self-defeating. In developed countries, for example, fiscal consolidation
after the global financial crisis had strong adverse effects on growth, resulting in even higher debtto-GDP ratios (Fatas and Summers, 2018). Fiscal measures should continue to focus on essential
pandemic-related expenditures, provide relief to the most vulnerable and support employment growth,with strategies broadly aligned towards supporting sustainable development. The composition of
fiscal outlays should take a strategic approach, such as by boosting public investments in physical anddigital infrastructure that can crowd-in private investments, and through targeted fiscal incentives topromote decarbonization, renewable energy and innovation. Investments in human capital, educationand public health care should remain priorities.
Pressures for fiscal consolidation will intensify, especially in developing countries. Faster-thanexpected monetary tightening in the United States would have severe implications for fiscal positions,especially as the recent rise in public debt has increased the vulnerability of fiscal policy to higher

23

History generally shows that government capacity to issue debt is crucial in tackling emergencies, including wars,
economic and financial crises, and pandemics (Eichengreen and others, 2021).

Premature fiscal
consolidation would bevery costly for recovery…

34

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

debt-servicing and rollover costs. Countries will need to assess their fiscal rules and establish credibledebt sustainability frameworks. In the medium-term, addressing debt sustainability will require a
combination of fiscal restraint when appropriate, robust growth and moderate inflation, according tocountry-specific circumstances. Countries with unsustainable external debt need fast and coordinatedinternational support for debt relief.

Figure I.18

General government gross debt
Percentage of GDP
0

20

40

60

80

100

120

140

Economies in transition

Western Asia

AfricaLatin America and the Caribbean

South Asia

East Asia

Advanced economies
Source: IMF World Economic
Outlook Database.
Note: e = estimates.

...but limited fiscal spaceconstitutes a major
constraint in developing
countries

2015

2021 eMany developing countries lack the fiscal space to effectively address the shock of the pandemic
much less invest in sustainable development. Countries in Africa and Latin America entered thecrisis with weak fiscal positions, which constrained their ability to pursue stimulus measures, rollout vaccination and expand social protection. Amid higher public debt, lower fiscal revenues andtightening global conditions, developing countries now face rising pressures for consolidation (figureI.18) even as escalating debt-servicing costs are already diverting resources from public investments
and the COVID-19 response. In addition, most developing countries lack fiscal capacities for dealing
with mounting climate risks. Enlarging fiscal space, in the short term, will require further international

CHAPTER IGLOBAL ECONOMIC OUTLOOK

35

support, including increased liquidity, debt relief and concessional financing.24 In the medium term,
though, greater fiscal space depends on strengthening tax revenues through progressive taxation andestablishing a multilateral mechanism for debt restructuring.
The fiscal and debt situation is extremely difficult in low-income developing countries. Nearly half are in
debt distress or at risk of it (IMF, 2021a). Elevated external debt burdens (figure I.19), additional borrowing
during the pandemic and increasing debt-servicing costs have pushed a rising number of these countries
to the brink of a debt crisis. For more than half the countries in sub-Saharan Africa, debt-servicing costs

Low-income developing
countries are in a veryfragile fiscal and debt
position

account for a quarter of government revenue. Worrisomely, many low-income countries have cut public
investment and capital spending and have implemented major reallocations of resources from key
development areas, including Cameroon, Liberia and Mauritania in Africa, Myanmar and Nepal in Asia,and some small island developing States such as Tonga and Samoa (IMF, 2021a). About two-thirds oflow- and lower-middle income countries have cut education budgets since the onset of the pandemic(World Bank and UNESCO, 2021). Some estimates also suggest that the pandemic has impacted social
spending on child protection, nutrition, and water and sanitation (UNICEF, 2021).

Figure I.19

External debt stock as a share of gross national income
Percentage
35

30

25

20

15

24

2012
Middle-income countries

2016
Low-income countries

2020

Countries could also explore new avenues, like intragovernmental borrowing. Intragovernmental debt, or thedifference between gross debt and net debt, is still very low in developing countries. Intragovernmental borrowing
from government-owned pension funds and insurance funds can help to ease some financing constraints. This is a
short-term solution that creates a critical long-term liability, however. Countries with weak revenues that consider
using this option for financing investments that do not stimulate productivity and growth should proceed withcaution.

Source: World Bank International
Debt Statistics, October 2021.

36WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Support from theinternational community
to low-income countries
has been insufficient

The international community’s policy responses to the plight of low-income countries have beensignificant but not sufficient. The G20 Debt Service Suspension Initiative, which paused debt servicing
to bilateral and multilateral creditors until December 2021, did not write off or reduce debt burdens
and provided limited debt relief to low-income countries. Of 73 eligible countries, only 50 requested
suspended debt servicing in 2020 and 2021. Many refrained from this option because they feared
credit downgrades.25 The initiative delivered an estimated $12.7 billion in debt relief (G20, 2021) orabout 23 per cent of debt repayments (IMF and World Bank, 2021). Moving forward, the Common
Framework for Debt Treatment beyond the DSSI is an agreement between G20 and Paris Club countries
to coordinate and cooperate on debt treatment for low-income developing countries. While this is a
step in the right direction, including through its consideration of debt cancellations, it only applies to
low-income developing countries.

The new allocation ofSpecial Drawing Rights
increases liquidity but
does not solve financing
challenges in developing
countries

In August 2021, the International Monetary Fund (IMF) increased the allocation of Special Drawing
Rights, distributing an extra $650 billion among member States proportionate to their existing quotas.
The least developed countries received 2.4 per cent of the new allocation, which is about 1.3 per centof their GDP. While this is an important measure to enhance liquidity and ease financing constraints(box I.2), it is not expected to solve the financing challenges in developing countries. Even if the Special
Drawing Rights are redistributed through IMF trust funds, a country can only access these additional
resources through an IMF-supported programme that presupposes a balance of payments need. It is
unclear whether additional Special Drawing Rights on the balance sheets of central banks can prevent
exchange rate depreciation and minimize exchange rate risks if foreign reserves dwindle.

Box I.2

Strengthening the impact of Special Drawing Rights
Special Drawing Rights are an international reserve asset that the IMF can issue to supplement
existing reserves required for addressing a long-term global crisis. Special Drawing Rights represent
unconditional liquidity and are not considered a loan from the IMF. Once they are allocated, IMF member
countries can hold them as part of their foreign exchange reserves or exchange them with othercountries (or prescribed holders) for freely usable currencies. Contrary to wide belief, the IMF Articles
of Agreement do not require Special Drawing Rights to be administered by countries’ central banks.
Fiscal agencies can decide on their use in accordance with national legal frameworks. Allocations arecost free, but use incurs an interest cost (currently 0.05 per cent) paid to the IMF on the difference
between a country’s cumulative allocations and its holdings. Countries with holdings that exceed their
allocations receive interest payments on the difference from the IMF.
In August 2021, the IMF issued a historic new allocation of Special Drawing Rights, equivalent to$650 billion. Several countries with strong external positions have expressed interest in a voluntary
25

Strikingly, 35 of the 37 beneficiaries of the Heavily Indebted Poor Countries Initiative are now on the list of the Debt
Service Suspension Initiative. These countries received bilateral debt relief during the first decade of the twentyfirst century only to return to the same debt crisis situation a decade later, illustrating the systemic nature of debt
problems in the developing world.

CHAPTER IGLOBAL ECONOMIC OUTLOOK

37

channelling of these to countries most in need while preserving their reserve asset characteristics. In
their June 2021 Carbis Bay Communiqué, Group of 7 (G7) countries called for a total global reallocationof $100 billion. Three mechanisms are currently under discussion to address both immediate liquidity
needs and longer-term financing requirements for sustainable development.
A first option is the donation or on-lending of Special Drawing Rights through the IMF Poverty Reduction
and Growth Trust, which facilitates concessional lending for low-income and other vulnerable countries
through IMF programmes. It allows lending countries to earn the interest rate on the Special Drawing
Rights, thus offsetting the cost of a deficit in their accounts. A reserve account covers the credit risk
associated with on-lending. Lenders can also seek early repayment if needed, allowing on-lent Special
Drawing Rights to retain their reserve asset characteristics. Some countries have already channelledtheir existing allocations this way, which tripled the concessional lending capacity of the IMF in 2020
(Georgieva, 2021).
As a second option, the IMF is developing a new Resilience and Sustainability Trust to channel
Special Drawing Rights towards affordable long-term financing for low-income countries, small island
developing States and vulnerable middle-income countries, with a focus on tackling the climate crisis.
This is in line with calls from the United Nations Secretary-General to establish a new trust fund at the
IMF to address the needs of such countries (United Nations, 2021a). The design of such a trust could
include safeguards to cover interest payments and credit risk, similar to those of the Poverty Reduction
and Growth Trust, and preserve the reserve asset characteristics of Special Drawing Rights.a The
facility should be finalized quickly and ensure broad accessibility to low- and middle-income countries.
A third option is to channel Special Drawing Rights through new or existing trust funds at multilateraldevelopment banks and/or regional development banks, which are already prescribed holders of Special
Drawing Rights. Such funds have or could develop financial mechanisms to allow the Special Drawing
Rights to retain their reserve asset characteristics, based on the model of the Poverty Reduction and
Growth Trust. These funds could leverage new resources for sustainable development, including nearterm needs such as vaccine purchases and longer-term sustainable development priorities. Some ofthis new financing could be channelled through national development banks to leverage their local
knowledge and expertise.
While these options can provide much needed additional financing, they should do so at a zero or
minimal interest rate to minimize additional debt burdens for developing countries. Further, theyshould not be subject to onerous conditions, including for fiscal consolidation, which would hamper asustainable recovery and risk further long-term economic damage. Given the enormous financial needs
in confronting the pandemic and supporting recovery, countries in a position to channel their excess
Special Drawing Rights should act quickly. Crucially, this should not crowd out official resources fordevelopment cooperation, such as official development assistance.

a In their October 2021
Communiqué, the G20
finance ministers and central
bank governors endorsed
the establishment of such amechanism and called on the IMF
and World Bank to collaborateclosely to develop and implement
financing under the new trust.
Author: Cornelia Kaldewei,
Financing for Sustainable
Development Office, United
Nations Department of Economic
and Social Affairs

38WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Gearing up labour market policies and social protection
Policies supporting employment
Countries have implemented a variety of policies to minimize pandemic fallout on employment.
Labour market policies, focusing on formal workers, were adopted or expanded. They comprised
wage subsidies, reforms to labour regulations, shorter working-time arrangements and job retention
schemes, along with active labour market policies to provide skills training and job placement support.
Social safety nets expanded at a historic speed to assist vulnerable groups in the informal sector
who are not covered by contributory social programmes. These introduced new temporary benefits,
expanded the coverage and generosity of existing benefits, and changed eligibility criteria.26 Demandside measures aimed at increasing liquidity for firms and providing tax relief and credit facilities, often
through deferrals of taxes on income and profits or postponement of the payment of value added
taxes.

Supporting job creationis critical to avoid longlasting scars from thepandemic

While there is still uncertainty around the magnitude, scope and durability of changes in labour markets,
the pandemic will likely have long-lasting effects on employment. Making recovery inclusive hinges on
speeding up job creation and the placement and reallocation of workers. Policymakers should notunderestimate the role of fiscal and labour market policies in this. Continued fiscal support is required
to sustain social safety nets for those who remain in need. Measures to ensure workplace safety must
accompany steps to ramp up employment programmes, create incentives for hiring and enact active
labour market policies.
Job retention schemes have prevented a further rise in unemployment in developed countries,
especially in Europe. Developing countries have focused on policy measures like shorter workingtime arrangements and changes in labour regulations. In Latin America, Colombia, Costa Rica andPeru reduced working hours or wages and instituted advance annual leave or even temporary worksuspensions (Blofield and others, 2020). Argentina, Brazil and Chile provided wage subsidies to
employers and workers to retain jobs and provide income stability. Low-income developing countries
were proactive in implementing regulatory changes and shorter working hours while wage subsidies
were less common due to budgetary and financing constraints.

Public employment
services should target
women, youth, migrants
and low-skilled workers

As vaccinations progress and mobility increases, countries need to expand active labour market
policies. These could include support to small and medium enterprises, targeted sectoral policies,
active promotion of employment, assistance in job searches, and skills training through investment
in public employment services, with a focus on youth, women, migrants, and low-skilled and selfemployed workers. Active labour market policies can advance the reallocation of workers into sectors
with growing job opportunities, improve the acquisition of new skills and generate better matches
between jobs and jobseekers. These policies can also help the labour market reintegration of groups
26

About 186 countries have implemented 734 conditional or unconditional cash transfer programmes, the mostutilized social protection response during the pandemic and particularly important for low-income countries(Gentilini and others, 2020).

CHAPTER IGLOBAL ECONOMIC OUTLOOK

39

that suffered disproportionate displacement. Previous evidence confirms the potential of thesepolicies in labour market recovery.27
Governments need to take proactive measures to incorporate gender dimensions across social
protection and labour market policies. Initiatives might include reforms to unemployment benefits,better targeted and designed training programmes, specific hiring incentives and increased
availability of childcare. Canada, Switzerland and Mexico have undertaken institutional coordination

Gender policy measuresare essential for an
inclusive recovery of
employment

and information sharing to advance gender-inclusive policies that improve women’s employment
and income prospects, reduce the unequal distribution of unpaid care responsibilities and address
gender-based violence. Support to specific sectors where women are overrepresented should also be
considered, for example, hospitality, essential services and social care.28
To make employment programmes more effective, public employment services should use skills demandand supply surveys to understand and cater to labour market needs. Services and firms need to work
together to assess needs for skills and design training programmes accordingly for those who are
un- and underemployed. Enhancing efforts to assess changing demands and provide targeted reskilling
programmes can help avoid skills mismatches that may occur due to structural changes, like digitalization
and automation, or those caused by the pandemic. Many countries are currently working on redesigning
public employment services. In Europe, Austria has established comprehensive, long-term measures
aimed at workers who lost jobs during the pandemic. France and the United Kingdom plan to expand
services focusing on young people by increasing front-line staff in public employment services.

Social protection to build resilience
Social protection systems are essential to resilience as amply demonstrated during the pandemic.
Yet the extent to which new social assistance policies will persist in developing countries is largely
uncertain. Governments will need to expand public revenues and mobilize financial resources in themedium term to strengthen social protection systems. The pandemic has led to some important policy
innovations, for example, in the delivery of social assistance in urban areas and through accelerated
crisis preparedness. These offer insights that could be applied to more comprehensive and integratedsocial protection systems moving forward. Adaptive social protection offers an integrated approachthat combines traditional social protection with disaster risk management and climate change
adaptation. It can help to build resilience in vulnerable households before, during and after shocks suchas droughts, floods or pandemics. This constitutes a shift towards a more long-term approach centred
on investing in the capacity of households to deal with and adapt to sudden crises.

27
28

In OECD countries, active labour market policies have shown particularly positive effects in the long run, especiallytraining programmes (Kluve, 2016).
Previous analysis of the effectiveness of active labour market policies in Latin America shows that programmes
focusing on women had better outcomes than those focusing on men (Ibarraran and Rosas, 2009; Kluve, 2016).

Expanding public revenue
in the medium term is
critical to strengtheningsocial protection

40WORLD ECONOMIC SITUATION AND PROSPECTS 2022

New technologies canhelp better identify social
programme beneficiaries

Determining social programme beneficiaries requires up-to-date information on incomes and living
situations. Since the onset of the pandemic, many countries have used innovative data-driven methods
to find new ways to identify beneficiaries. For instance, Pakistan combined information on several
factors to qualify nearly 100 million people for the Ehssas emergency cash programme, including
assessments of household property, vehicles and telephone bills. Nigeria used a mixed approach
blending census data and satellite imagery, processed with machine learning algorithms, to calculate
the size and location of dwellings as part of determining poverty levels. These technology-enabledinterventions expanded the reach of cash transfers compared to pre-pandemic levels (Gentilini andothers, 2020).29 Such innovations could create dynamic social registries that are updated throughout
the year and can help quickly identify households in need in times of crisis.

Monetary policy: overcoming the addiction to easy money
Central banks deployed awide range of monetarymeasures to support therecovery...

Global monetary policy responses to the COVID-19 crisis were extraordinary around the world. Central banks
cut short-term interest rates, lowered reserve bank requirements, established new lending facilities, used
forward guidance and changed their monetary policy frameworks. Major central banks such as the Federal
Reserve, the European Central Bank and the Bank of Japan and some central banks in developing countries
engaged in asset purchase programmes (see chapter 2). The Federal Reserve also temporarily expanded
the number of countries that were offered swap lines from 5 to 14, including 4 developing countries. Suchmeasures helped stabilize financial markets, reduce uncertainty and support the recovery.

...but as inflation
gathers pace, monetaryconditions are expected
to tighten quickly

As economic activity gathers pace and inflationary pressures gain momentum in the United Statesand many developing countries, exceptionally accommodative monetary policy stances are graduallyshifting. A few major central banks have announced plans for or started gradual normalization. The
Federal Reserve, for example, initiated the tapering of its asset purchase programme by the endof November 2021 while the Bank of Canada scaled back its programme even earlier.30 Changes
in monetary conditions have been rapidly gaining steam in developing and transition economies
especially since the second half of 2021 (figure I.20). Central banks have increased interest rates ina growing number of countries, including Brazil, Chile, Hungary, Mexico, the Russian Federation andSouth Africa.31 In 2021, a few central banks, for example in Brazil and the Russian Federation, took
drastic measures, increasing interest rates by 725 and 325 basis points, respectively.

29
30
31

Other approaches, such as the use of electricity consumption data in Guatemala or a voter database paired withsatellite image data and phone records in Togo, also showed encouraging early results.
The European Central Bank and the Bank of Japan have not yet signalled changes in their policy stances as ofDecember 2021.
One of the few exceptions is Turkey, where the central bank cut interest rates by 2 percentage points in October
2021, prompting a significant depreciation of the domestic currency.

CHAPTER IGLOBAL ECONOMIC OUTLOOK

41

Figure I.20

Central bank interest rate decisions, 2020 and 2021
Number of countries
90
80
70
Africa

60

CIS and Georgia
50

South-Eastern Europe

40

Asia
Europe30

North America

20

Developed Asia andthe Pacific2020

H1 2021

Rate hike

Unchanged

Rate cutRate hike

Unchanged

Rate cutRate hike

Unchanged

0Rate cut

10Latin America and the
Caribbean

July – October 2021

The shift in monetary policy support is a major challenge for the world economy amid a still raging
pandemic, elevated levels of sovereign and private sector debt and record-high stock market valuations
in developed countries. The challenge that monetary policymakers face is exacerbated by thedifficulty in assessing trade-offs between growth, employment and inflation, given the significant andsimultaneous impacts of the crisis on labour markets, global supply chains and potential output.32 In
addition, the trajectory of inflation is surrounded by major uncertainties associated with the pandemic,
the rapid spending of accumulated savings and changes in consumption patterns. Supply-chain
problems seem to be intensifying inflationary pressures as supply has not kept up with the release ofpent-up demand in many sectors.
In particular, the Federal Reserve faces the challenge of scaling down its asset purchase programme. It
must ensure appropriate timing and pacing to maintain global financial stability and prevent premature
fiscal consolidation. The recent rise in inflation has raised serious concerns in the United States that
this could become a longer-term phenomenon. If that proves to be the case, faster-than-expected32

The uneven impact of the COVID-19 pandemic across sectors and the massive reallocation of resources further
complicates assessment of overheating points. Guerrieri and others (2021) discuss how a desire to facilitate thereallocation process can lead to favouring a more expansionary monetary policy because higher inflation canfacilitate the adjustment of relative wages and provide the right price signals to encourage mobility.

Source: UN DESA, based ondata from CEIC (accessed on 23
November 2021).
Notes: 101 central banks arecovered based on available data.
H1 = first half of 2021.

Amid rising inflationand persistent slack inlabour markets, monetary
policymakers face major
challenges ahead

42WORLD ECONOMIC SITUATION AND PROSPECTS 2022

monetary tightening, with the Federal Reserve raising interest rates several times throughout 2022,
could derail recovery at a time when the economy is still operating with 6 million fewer people in
the labour market. It could also trigger global financial turmoil, including large corrections in asset
prices. For many developing countries, a sudden rise in interest rates could trigger capital outflows andworsen their growth outlook and debt situation, especially those with elevated foreign-denominatedexternal debt.

Developing countries
should prepare formonetary tightening in
the United States

In developing countries, monetary policy normalization needs to proceed with caution. Where economic
activity is on a relatively robust trajectory and vaccination rates are elevated, central banks may act
to tame rising inflationary pressures. Yet overly aggressive tightening could undermine the recoveryof employment. Developing countries should also prepare for a faster-than-expected monetaryadjustment in the United States, for example, by limiting maturity mismatches in their balance sheets.
Foreign exchange interventions and temporary capital controls can help strengthen the capacity ofmonetary policy to respond to country-specific inflation and growth dynamics.

Multilateralism in a world of crises
Reinvigorating
multilateralism remains
essential to confronting
the health and climate
crisesThe pandemic has been a stark reminder that the world must remain united and respond collectively
to global crises. The need for a well-functioning multilateral system is more evident than ever. Yetvast disparities in vaccine roll-outs between developed and developing countries, limited progressin tackling mounting climate risks and inadequate commitments to addressing debt challenges
show that multilateralism falls short of effective responses to global challenges. Ongoing crises areexacerbating development asymmetries and increasing inequalities, worsening the health and climate
emergencies, and making progress towards the 2030 Agenda for Sustainable Development moredifficult if not impossible. Reinvigorating multilateralism will determine whether the world can getback on a track towards sustainable development. The draft Doha Programme of Action for the least
developed countries addresses these issues and requires comprehensive action by all stakeholders toensure that these most vulnerable countries are not left behind.33

Addressing intellectual
property issues would
strengthen the global
vaccine supply

Developing countries, especially low-income countries, continue to face enormous hurdles in securing
access to vaccines. Realizing an agreed target to vaccinate 70 per cent of the global population by
mid-2022 (WHO, 2021) requires accelerated vaccine redistribution. Countries with high volumes ofvaccines must provide doses to low- and lower-middle-income countries through swaps delivery
schedules with COVAX and the African Vaccine Acquisition Trust, fulfil donation pledges and release
manufacturers from previous contracts so they can channel doses to countries with low vaccination
rates. Other crucial elements are the elimination of trade restrictions on exports of medical equipment,
raw materials and vaccines, and the expansion and diversification of the global vaccine supply

33

On 21 December 2021, the Preparatory Committee approved the draft Doha Programme of Action for the least
developed countries and decided to recommend it to the Fifth United Nations Conference on the least developed
countries for adoption.

CHAPTER IGLOBAL ECONOMIC OUTLOOK

43

chain.34 The multilateral system needs to address intellectual property and technology transfer issues
as a priority. Absent a clear path to approve and scale up the production of new vaccines, enacting
intellectual property waivers remains the best option to improve supplies.
Climate change poses an urgent global challenge requiring highly ambitious actions on mitigation
and adaptation. In August 2021, the Intergovernmental Panel on Climate Change issued its Sixth
Assessment Report (IPCC, 2021a). It provides stark warnings of increasingly extreme heatwaves,droughts and flooding, among many other forms of climate fallout.35 In November 2021, the 26th

The world is falling shorton climate action despite
commitments to reducecarbon emissions

Conference of the Parties to the United Nations Framework Convention on Climate Change concluded
with significant new commitments to climate action intended to move towards net-zero emissions in
the next few decades. Led by the European Union and the United States, over 100 countries pledged
to reduce methane emissions by 30 per cent by 2030. Backed by $19.2 billion in public and private
funding, 100 countries agreed to end and reverse deforestation by 2030. India set a goal of reachingnet-zero emissions by 2070 and ensuring renewable energy makes up 50 per cent of its energy mix by
2030. China promised to reduce its methane emissions this decade. In total, net-zero commitments
now cover 80 per cent of total emissions, but even so, pledges fell short of keeping warming below
1.5 degrees Celsius, considered the threshold for avoiding the worst consequences of climate change.
Global temperatures are estimated to rise from 1.8–2.7 degrees Celsius by the end of the century,
depending on the implementation of announced targets (Climate Action Tracker, 2021). In terms of
net-zero goals, only Chile, Costa Rica, the European Union and the United Kingdom have adequately
designed targets.36
To avoid the worst damages from global warming, the world needs to halve global carbon emissions by
2030 and reach net-zero emissions by 2050, yet it is uncertain that countries will do what is necessary
before the climate crisis becomes unmanageable. There are significant risks that climate change could
push 132 million more people into poverty in the next decade and displace more than 216 million
individuals by mid-century (World Bank, 2021b). Climate impacts on essential infrastructure could beenormous, especially for the most vulnerable countries, including the small island developing States.37
Accelerated capacity building and adaptation of infrastructure will be critical.38 Progress will largely

34
35
36

37
38

The 12th World Trade Organization Ministerial Conference offers an opportunity for member States to achieve
more rapid vaccine production and more equitable distribution.
The report projects that, depending on the scenario, a mean global temperature increase of 1.5 degrees Celsius
relative to pre-industrial times will likely be reached by 2040. If emissions are not slashed in the next few years,
this temperature rise may be realized even earlier.
Of major importance is the EU Climate Law, which entered into force in July 2021. It sets a binding objective of
climate neutrality in the European Union by 2050 and a binding target of reducing net domestic greenhouse gas
emissions by at least 55 per cent compared to 1990 levels by 2030. The law also envisages strong action on
climate change adaptation and resilience-building as well as related stocktaking, assessment and review, startingin 2023.
In many small island developing States, critical infrastructure assets are at high and growing risk of climatechange impacts such as coastal flooding from as early as the 2030s (Monioudi and others, 2018; IPCC, 2018).
Recent research emphasises the role of resilient infrastructure as “a lifeline for sustainable development”, withlarge net benefits of investing in more resilient infrastructure in low- and middle-income countries (Hallegatte andothers, 2019).

Climate impacts on
infrastructure could beenormous for small island
developing States

44WORLD ECONOMIC SITUATION AND PROSPECTS 2022

depend on better access to affordable financing, which should favour more grants over loans to avoid
increasing already onerous debt burdens.

Debt relief measures for
low-income countries
remain insufficient toconfront the pandemic
and support the recovery

For many developing countries with unsustainable debt levels, a comprehensive approach to debt
relief is needed. This includes plans for timely and orderly debt restructuring. The “doing too little, toolate” approach has proven harmful in previous crisis, delaying recoveries, fuelling unsustainable social
tensions and raising the cost of debt restructurings. Since debt relief efforts have been insufficient,
many countries are facing unbearable trade-offs between servicing debt, containing the crisis andpromoting recovery.
The Common Framework for Debt Treatments beyond the DSSI agreed by G20 and Paris Club countries
could kickstart a more permanent and comprehensive debt restructuring mechanism. But some
aspects need further consideration. Only low-income countries are eligible to participate, even thoughmany middle-income countries also need urgent debt relief. In addition, there is no clear mechanism
to ensure the participation of private creditors, who account for a large share of creditors in many
countries (figure I.21). Many countries also hesitate to join the Common Framework due to the fearof triggering technical defaults or sovereign rating downgrades, which would in turn raise borrowing
costs and limit access to financial markets.39 Finally, the Common Framework lacks commitments bycreditors and debtor countries to align newly found fiscal space with agreed climate and development
goals.40

A new accord to reformthe international tax
system aims at reducing
tax avoidance by large
multinational firms...

In 2021, 136 countries reached a landmark accord to reform the international tax system, a major
policy development geared towards reducing tax avoidance.41 The agreement aims to redistribute ashare of the profits of the 100 largest multinationals to increase tax revenues in countries where firms
earn their profits. It applies to multinationals with global sales above 20 billion euros and profitability
above 10 per cent. The new rules stipulate that 25 per cent of residual profits (profit beyond 10 per
cent of revenue) will be allocated to market jurisdictions. The OECD has estimated that up to $125
billion in profits could be reallocated to more than 130 countries a year by 2023 (OECD, 2021b). The
agreement also commits to introducing a global minimum corporate tax rate of 15 per cent for firms
with revenues above 750 million euros to minimize their use of tax havens and low-tax jurisdictions.
As such, it helps to reduce race-to-the-bottom tax strategies.42 The agreement is expected to increase
global tax revenue by $150 billion annually.

39
40
41
42

As of November 2021, only three countries (Chad, Ethiopia and Zambia) had requested to participate in the
Common Framework.
This is an important issue as climate vulnerable countries pay higher costs to service their debt and climate risks
increase sovereign risks (Volz and others, 2020).
Estimates suggest that governments forego about $240 billion annually through multinational practices such asbase erosion and profit shifting (OECD, 2021c).
Between 1985 and 2018, the global average corporate tax rate fell from 49 per cent to 24 per cent; estimatessuggest that about 36 per cent of multinational profits are shifted to tax heavens (Torslov, Wier and Zucman,
2021).

CHAPTER I

45

GLOBAL ECONOMIC OUTLOOK

Figure I.21

1,500

40

1,000

20

500

0

0
20

20

20

20

20

20

Multilateral

Bilateral

20

60

20

2,000

20

80

20

2,500

20

100

18

3,000

16

120

14

3,500

12

140

20

Trillions of United States dollars

16

Trillions of United States dollars

14(b) Middle-income countries

12(a) Low-income countries

18

Public and publicly guaranteed external debt, by creditor

Private creditors

Source: World Bank, International Debt Statistics, October 2021.

While this agreement represents a commitment to reforming the status quo in global taxation, it still
has major shortfalls that need to be fixed so that benefits reach developing countries and not just a
few large developed economies. A 15 per cent global minimum corporate tax sets the bar too low,
for instance, and potentially makes this a global standard. This would particularly affect developing
countries that rely relatively more on corporate taxes as a source of government revenue.43 Further,
the main beneficiaries will likely be a small number of developed countries with existing multinational
headquarters, undermining the principle of fairness assumed to underlie the accord (ICRICT, 2021).
Developing countries in fact stand to lose out due to its allocation principles and absence of dispute
resolution mechanisms. In response, the Group of 77, representing 134 developing countries, hasreiterated its long-standing call to establish a global tax body within the United Nations. It could
spearhead further reforms to tax regulations globally through transforming the United Nations
Committee of Experts on International Cooperation in Tax Matters into an intergovernmental forum(Ocampo, 2021).
43

A report by the Tax Justice Network (2021) highlights that developed countries lose more in absolute terms due tocorporate tax abuse by multinationals but that the relative hardship caused by these practices is much higher inpoorer countries. Losses due to corporate tax abuse in low- and lower-middle-income countries account for 48 percent of their public health budgets, while in high- and upper-middle-income countries they account for 10 per cent.

...but most beneficiaries
will likely be a few large
developed countries

CHAPTER II

CHAPTER II

THE MONETARY POLICY RESPONSE TO COVID-19

47

The monetary policy response to
COVID-19: direct impacts and spillovers
The COVID-19 pandemic triggered the worst global economic downturn in almost a century. Since theonset, countries around the world have rolled out extraordinary macroeconomic measures to savepeople’s livelihoods, limit economic damage and kickstart recovery. With less room to reduce interest
rates than during the 2008-2009 global financial crisis, central banks, especially in developed countries,
relied more heavily on unconventional monetary policy tools. The most notable involved large-scaleasset purchases to spur liquidity, prevent financial meltdown and stimulate economic activities.
These policies were effective in stabilizing financial markets and boosting aggregate demand during
the early stages of recovery. But initial positive effects have lost strength over time. The continuationof ultraloose monetary policies, with central banks pumping massive amounts of liquidity to keep longterm interest rates low, could worsen the mispricing of risks and further inflate equity prices in major
financial markets, while exacerbating wealth inequality.
This chapter reviews the global monetary response to COVID-19, focusing on large-scale asset purchaseprogrammes (APPs) deployed by central banks in developed and developing countries. It discusses
how these policies have supported economic recovery and assesses negative side effects and risks. It
presents the challenges major central banks face in tapering asset purchases and managing risks offinancial market instability that could arise from a disorderly adjustment of asset prices.

The global monetary response to COVID-19
The monetary response to the pandemic has broadly followed the global financial crisis playbook butwith unprecedented speed, scale and scope. The initial COVID-19 shock presented two immediate1

challenges for central banks. First, the nature of the shock was highly unusual, with strongly correlated
supply- and demand-side shocks amid unprecedented economic uncertainty. Second, after a decadeof ultraloose monetary policies, central banks, especially in developed countries, had limited room forpursuing conventional monetary policies.
These twin challenges prompted central banks to deploy a wide range of monetary policy tools that
included unconventional measures such as forward guidance, APPs and expanded lending operations(Cantú and others, 2021). In addition to expanding existing facilities and reactivating measures adopted
during the global financial crisis, central banks established many new programmes. The monetary

1

English, Forbes and Ubide (2021) provide a comprehensive review of the monetary response to the COVID-19
pandemic.

The pandemic triggered
an unprecedented
monetary response48WORLD ECONOMIC SITUATION AND PROSPECTS 2022

response strongly complemented fiscal policies, often blurring traditional distinctions between the two(Bartsch and others, 2020).2
Amid continued uncertainty about the near-term economic outlook, central banks in developed countries
have generally chosen to keep their monetary policy stances exceptionally accommodative well into
2021 to boost aggregate demand, reduce unemployment and close output gaps. A combination of
supply-chain bottlenecks, energy price increases and the release of pent-up demand, however, haspushed inflationary pressures in many parts of the world, presenting an additional challenge. Whileeconomic recovery remains highly uncertain, a growing number of central banks, especially indeveloping and transition economies, have started to tighten monetary policy stances, pre-empting
the prospect of higher inflation beyond the near term. At the same time, a few major developed country
central banks have announced plans for gradual policy normalization. In the United States of America,
the Federal Reserve started tapering its monthly asset purchases in late November 2021.

Interest rate measures and reserve policies
Aggressive cuts ininterest rates and reserve
requirements boosted
liquidity

When COVID-19 hit in early 2020, central banks quickly and aggressively cut short-term interest rates
to increase liquidity, reduce borrowing costs and support economic activity. Policy rates in developed
countries were already at low levels, however – often close to or at the effective lower bound (figureII.1).3 This was due to a long-term decline in the natural rate of interest (i.e., the real interest rateconsistent with full employment and stable inflation) and prolonged monetary accommodation. In
February 2020, the GDP-weighted average policy rate in developed countries was 0.9 per cent, far
below the 3.5 per cent in August 2008 before the global financial crisis.4 In as many as 23 developed
countries (Denmark, Japan, Sweden, Switzerland and 19 euro area countries), policy rates were at or
below zero when the pandemic began. Likewise, rates in developing countries were generally lower
than at the onset of the global financial crisis although monetary conditions varied widely within thisgroup. Among a sample of 36 developing countries, the average policy rate in February 2020 was 3.2
per cent compared to 7 per cent in August 2008. As a result, the magnitude of rate cuts in response to
COVID-19 was considerably smaller than it was during the global financial crisis.
Several central banks provided additional liquidity to financial institutions by reducing the bank reserve
requirement ratio (such as Brazil, China, Malaysia, the Philippines and the United States), lowering
the remuneration rates on reserves (China, New Zealand and Turkey) or enhancing flexibility for
instruments that count as reserves (Malaysia and the Philippines).

2
3
4

English, Forbes and Uribe (2021), for example, note that some central bank lending programmes amounted toquasi-fiscal operations.
The effective lower bound is the limit on how low policy rates can go. Below the lower bound, it becomes profitablefor financial institutions to exchange central bank reserves for cash.
At the time of the Lehman Brothers collapse in September 2008, the average rate was still 3.1 per cent.

CHAPTER II

THE MONETARY POLICY RESPONSE TO COVID-19

49

Figure II.1

Central bank policy rates in developed and developing countries

12

13

14

15

16

17

18

19

20

21

l-

l-

l-

l-

l-

l-

l-

l-

Ju

Ju

Ju

Ju

Ju

Ju

Ju

Ju

l-

Ju

Ju

Developing countries

l-

0
l-

0
Ju

2

11

2

l-

4

Ju

4

1o

6

09

6

l-

8

08

8

Ju

10

07

10

l-

12

l-

12

Ju

14

06

14

l-

16

Ju

16

05

18

l-

18

Ju

Percentage

Ju

Percentage

Developed countries

Sources: UN DESA, based on datafrom the Bank for International
Settlements, CEIC and WorldBank Open Data (accessed on 17
November 2021).
Note: The lines display the GDPweighted average policy rates for aset of 36 developing countries anda set of 14 developed economies
plus the euro area. The shaded
areas indicate the range between
the twenty-fifth and seventy-fifth
percentile of the respective policy
rates.

Expanded lending and foreign exchange operations
Most central banks in developed and developing countries expanded emergency lending operations at
the outset of the pandemic. They adjusted existing facilities, for example, by increasing their size (suchas China, Colombia and the Republic of Korea), broadening eligible collateral (Canada, Chile, Japan andSingapore) and changing the maturity of instruments (Canada, India and the United States). They alsoestablished entirely new programmes.5 In addition to providing short-term liquidity to banks and otherfinancial institutions, central banks deployed measures to support the flow of credit to households andnon-financial corporations. “Funding for lending” programmes, which provide banks with access to
low-cost funding to lend to businesses and consumers, have become an important policy instrument(Casanova and others, 2021). In 2020, several central banks introduced such programmes, including
the European Central Bank (ECB) through the third phase of the Targeted Long-Term Refinancing
Operations Programme, the Bank of England, the Reserve Bank of Australia, the Saudi Arabian
Monetary Authority and the Swiss National Bank. These programmes differed from standard lending
facilities in that banks could only access the funds if they increased lending to the private sector –either generally or to certain segments such as small and medium-sized enterprises or industries hit
hard by the pandemic. In a similar vein, many developing country central banks, especially in Latin
5

For instance, in March 2020, the Central Bank of Argentina approved a new scheme of credit lines for micro-,small and medium-sized enterprises. The Bank of Canada launched the Standing Term Liquidity Facility to provide
temporary liquidity support for eligible financial institutions.

Central banks supported
credit availability for theprivate sector

50WORLD ECONOMIC SITUATION AND PROSPECTS 2022

America and East Asia, introduced or expanded measures to channel credit to small and medium-sizedenterprises. One example is Chile’s Fondo de Garantía para Pequeños Empresarios (Small Business’
Guarantee Fund), which expanded significantly in size and scope.

Extended and new
currency swap lines
helped stabilize exchange
rates

During the early stages of the pandemic, capital outflows from developing countries threatened
exchange rate stability, while soaring demand for dollar-denominated assets strained offshore dollar
funding markets. In response, the Federal Reserve reduced the costs and extended the maturity of its
standing dollar liquidity swap lines with the Bank of Canada, the Bank of England, the Bank of Japan, the
ECB and the Swiss National Bank. With nine other central banks, it also reopened temporary swap lines
activated during the global financial crisis (Australia, Brazil, Denmark, Mexico, New Zealand, Norway,
the Republic of Korea, Singapore and Sweden). Developing country central banks used different
forms of foreign exchange interventions to improve liquidity and mitigate exchange rate volatility. For
instance, they signed or renewed currency swap lines with each other (such as Argentina and China,
China and Thailand, China and Turkey, Indonesia and the Republic of Korea, and India and Sri Lanka),
lowered foreign exchange reserve requirements for banks (China, Indonesia, Peru and Turkey) andconducted foreign exchange repurchase operations (Brazil) and exchange-rate hedging (Colombia).6

Forward guidance and asset purchase programmes
APPs have become a
primary stimulus tool indeveloped countries

As policy rates in many countries reached or came close to their effective lower bound,7 central banks
began to rely more heavily on unconventional monetary policy tools, including forward guidance andlarge-scale APPs.8
Forward guidance, used by major developed country central banks, signals that interest rates willremain low for a prolonged period. The Federal Reserve, for example, committed to keeping the federal
funds rate at a target range between 0–0.25 per cent “until labor market conditions have reached[…] maximum employment and inflation […] is on track to moderately exceed 2 percent for sometime” (Federal Reserve, 2021). Other central banks have provided a combination of state- and timecontingent forward guidance.
Given limited conventional monetary policy space, large-scale APPs have become the primary stimulus
tool for many developed country central banks during the COVID-19 crisis. The programmes have taken
a variety of forms depending on the country context and institutional framework. Developed country
central banks adjusted and massively expanded existing programmes introduced during the global
financial crisis while also launching new ones. In developing countries, 27 central banks adopted APPs

6
7
8

A few countries, such as Argentina, China, India and Peru, also adjusted capital flow management measures,
aiming to incentivize inflows and mitigate outflows (OECD, 2020).
In the second quarter of 2020, policy rates approached or hit their effective lower bound in almost all developed
countries and several developing countries, including Chile, Israel, Peru, the Republic of Korea and Thailand.
Negative interest rates were not widely used in response to the pandemic. Denmark, Japan and Switzerland haveremained the only economies with policy rates in negative territory.

CHAPTER II

51

THE MONETARY POLICY RESPONSE TO COVID-19

as a new policy tool. The rest of this chapter will focus on the role of APPs in the crisis response, themacroeconomic and distributional implications, and challenges in exiting the policy.

Central banks’ large-scale asset purchaseprogrammes
Central bank purchasing of longer-term financial assets, also known as quantitative easing, is still a
relatively new monetary tool, first introduced by the Bank of Japan in 2001.9 The Federal Reserve, the
ECB and the Bank of England adopted quantitative easing in response to the global financial crisis in
2008-2009 after lowering short-term interest rates to close to zero. As economic growth remained
subdued and inflation below target during much of the decade after the crisis, all four central banks
continued to use the asset purchase mechanism albeit with some pauses.10

Mechanism and transmission channels
The ultimate objective of large-scale asset purchases by central banks is to boost economic activity
and bring inflation back to target. In theory, APPs are expected to work as follows (for a more detailed
look at several potential transmission channels, see box II.1). Central banks purchase long-maturity
securities, such as government bonds or mortgage-backed securities, from banks and other financial
institutions (for example, pension funds) in exchange for short-term liquidity in the form of cashequivalent bank reserves. Central banks buy these long-term securities to complement demand fromfinancial intermediaries, including during high economic uncertainty when the latter consider thesesecurities too risky. Demand for mortgage-backed securities fell sharply during the global financial
crisis, for instance, as market participants lost confidence in their financial value. Many consideredthem toxic assets even though they were collateralized debt obligations of issuers. The Federal
Reserve’s purchase of these securities pushed up their prices, reduced their yields and restored market
confidence, a sine qua non for proper functioning of the financial market.
Asset purchases by central banks also inject additional liquidity, which, at least in theory, should
encourage banks to lend more. At the same time, the decline in government bond yields reduces
longer-term borrowing and debt-servicing costs in the private sector, for example, for mortgages,
auto loans and consumer debt. This is expected to boost consumption and investment, stimulating
economic growth and job creation as well as enabling the central bank to achieve its inflation target.
APPs thus have multiple objectives: to restore market confidence and financial stability, lower longterm borrowing costs, boost credit flows and reduce the cost of servicing existing debt. All of theseare expected to stimulate aggregate demand, employment and economic growth. How APPs work
910

The rest of the chapter mainly refers to the policy as APPs.
The Federal Reserve paused its asset purchases between October 2014 and March 2020; the ECB between
January and November 2019.

APPs are expected
to support market
functioning and boost
economic activity

52WORLD ECONOMIC SITUATION AND PROSPECTS 2022

in practice, however, varies significantly across countries and over time (see the discussion on APP
achievements and side effects).
Box II.1

Transmission channels of asset purchase programmes
Since the global financial crisis, quantitative easing has received a great deal of attention in theoreticaland empirical research. Yet its effects are still not fully understood and remain debatable if notcontroversial. While traditional benchmark models of monetary policy predicted that quantitativeeasing would be largely ineffective (see, for example, Eggertsson and Woodford, 2003; Woodford,2012), new research has identified a variety of potential transmission channels to the real economy.aA core argument for APPs is that central bank purchases of government bonds (or other financial
assets) reduce long-term interest rates and boost asset prices through a portfolio rebalancing effect,a liquidity effect and a signalling effect.
The portfolio rebalancing effect is predicated on the assumption that investors have varying
preferences for specific maturities. In this environment, a central bank’s bond purchases change therelative supply of different assets, affecting their relative prices. In response, investors rebalance theirholdings, bidding up the values of remaining government bonds and their close substitutes. As a result,long-term yields fall and the yield curve flattens. The portfolio rebalancing effect is associated with adecline in the term premium.b
The liquidity effect is especially relevant during the immediate crisis phase, when central banks step inand, via APPs, provide a liquidity backstop to the financial market (Ferdinandusse and others, 2020).
During financial turmoil, market participants lose confidence in the value of assets or, relatedly, in thesolvency of their trading counterparts. This situation can quickly lead to liquidity spirals, fire sales
and negative feedback loops as money markets “dry up” and uncertainty rises. When central banks
enter with large APPs, they step in as deep-pocketed market makers of last resort. They provide afloor for asset prices, restoring confidence and liquidity in the market. This liquidity effect can help
central banks address specific bottlenecks in financial market segments where liquidity is needed andconfidence is low.
a For an overview and discussionof various transmission channels,see, for example, Gern and others(2015), Bundesbank (2016) andBernanke (2020).
b The term premium is the amountby which the yield on a long-termbond is greater than the yield on
shorter-term bonds.

Finally, the signalling effect is related to forward guidance strategies used by central banks to influence
expectations about future short-term interest rates. Market participants may interpret large-scaleasset purchases as an additional commitment by the central bank to keep short-term policy rates
at (or close to) the effective lower bound for an extended period. As expectations for future shortterm interest rates shift downwards, long-term interest rates also fall. The signalling channel is largely
muted in the early stages of recovery when inflation is well below target. The effect becomes more

CHAPTER II

THE MONETARY POLICY RESPONSE TO COVID-19

53

relevant as recovery progresses, inflation picks up and uncertainty about the future path of interest
rates increases.
The reduction in long-term interest rates – through portfolio rebalancing, signalling, and, to a limited
extent, additional liquidity – is expected to improve overall financing conditions in the economy andboost aggregate demand in several ways. For one, higher or restored asset prices are expected togive rise to a wealth effect, boosting spending by businesses and households. At the same time,
lower yields should exert downward pressure on the domestic currency, potentially stimulating net
exports, producing an exchange rate effect. In addition, lower long-term interest rates are likely to
reduce borrowing costs for governments, providing extra room for fiscal expansions, resulting in a
fiscal effect. Finally, quantitative easing may stimulate the real economy through a bank lending effect.
As banks receive cheap liquidity in the form of central bank reserves, they have more room to increase

Author: Ingo Pitterle, United
Nations Department of Economic
and Social Affairslending to the private sector.

Asset purchase programmes in developed economies: thetrillion-dollar bazooka
The magnitude of APPs to respond to COVID-19 is reflected in the massive expansion of the balance
sheets of major central banks. Since March 2020, the central banks of Japan, the United Kingdom, theUnited States and the euro area have added roughly $10.2 trillion in security assets to their balance
sheets, with total assets soaring to over $25.9 trillion by the end of September 2021 (figure II.2a).11
Balance sheets have also ballooned as a share of GDP. In the second quarter of 2021, total financial
assets on central bank balance sheets ranged from 35 per cent of GDP in the United States to 130 per
cent of GDP in Japan (figure II.2b).
The Federal Reserve responded to distressed financial markets in the early stages of the crisis byexpanding its balance sheet by about $3 trillion between March and June 2020. Since then, it has
been buying $120 billion of Treasury securities and mortgage-backed securities each month. As aresult, the Federal Reserve’s total assets have more than doubled since the pandemic started, risingfrom $4.2 trillion to about $8.6 trillion.12 In contrast to earlier quantitative easing programmes that
focused on longer-term securities, the Federal Reserve has recently purchased Treasury securities
across a broader range of maturities. In the second quarter of 2021, it held 24.8 per cent of total debt
of the Government of the United States. In November 2021, the Federal Reserve began to taper its
purchases of securities. After reducing the volume of net asset purchases by $15 billion in November
and December, the Federal Reserve decided to speed up the tapering process to counter persistently

11
12

Total assets of the four major developed country central banks slightly exceeded the combined assets undermanagement of the top four global asset managers.
This amount includes $2.6 trillion in mortgage-backed securities implicitly guaranteed by the United States
Government and $5.5 trillion in United States Treasury securities.

Developed country
central banks massively
expanded their balance
sheets54WORLD ECONOMIC SITUATION AND PROSPECTS 2022high inflation. From January 2022 on, net asset purchases are expected to decrease by $30 billion permonth and end in March 2022.
The ECB implemented its 1.85 trillion-euro Pandemic Emergency Purchase Programme (PEPP) in
March 2020 to counter COVID-19-induced risks for the euro area.13 The programme complements
existing APPs, which have a monthly target pace of 20 billion euros. Expected to end in March 2022,
PEPP includes purchases of private and public sector securities, including corporate bond securities,
asset-backed securities, covered bonds, central government bonds, and regional and local government
bonds. The ECB’s total assets have increased from about 4.7 trillion euros in March 2020 to 8.4 trillion
euros in October 2021.
The Bank of Japan supported the flow of credit to the private sector by raising the upper limit on theamount of outstanding corporate bonds and commercial paper (long and short maturities) to 20 trillion
yen. The additional purchases have been extended until at least the end of March 2022 (Bank of Japan,2021). The bank committed to further supporting public finances by announcing potentially unlimited
purchases of government bonds after already holding 43 per cent of outstanding government debt
at the end of 2019 (Benigno and Pesenti, 2021). The Bank of Japan is the only major central bank tocontinuously engage in purchases of exchange-traded funds (ETFs) and Japan real estate investment
trusts (J-REITs).
The Bank of England has expanded its quantitative easing programme by about £450 billion since thepandemic began. In total, it has purchased £895 billion worth of bonds since November 2009, almost
exclusively United Kingdom government bonds. Unlike other major developed country central banks,
the Bank of England already has an exit strategy from the extraordinary policies put in place during thecrisis. It plans to raise the key policy rate from 0.1 per cent to 0.5 per cent before reducing its balance
sheet by not reinvesting the proceeds.

13

The ECB announced the programme with an initial 750 billion euros, a sum that increased by 600 billion euros inJune 2020 and by 500 billion euros in December 2020.

CHAPTER II

55

THE MONETARY POLICY RESPONSE TO COVID-19

Figure II.2

Balance sheets of major developed country central banksa) Total assetsb) Total assets as a share of GDP

Trillions of United States dollars

Percentage

30

60

140

25

50

120

20

40

15

30

10

100
80
60

20

Fed

ECB

21

20

20

19

20

18

20

17

20

16

20

15

BoE

20

14

20

13

20

12

20

11

20

20

20

10

0
09

0
08

20

20

21

20

Ja

n-

19

Ja

n-

18

Ja

n-

17

Ja

Ja

n-

16

BoJ

n-

15

Ja

Ja

n-

14

BoE

n-

13

Ja

Ja

n-

12

ECB

n-

11

Ja

Ja

n-

10

Fed

n-

09

n-

Ja

n-

Ja

n-

08

0

40

10

20

5

Ja

Percentage

BoJ (right-hand scale)

Sources: UN DESA, based on data from the Federal Reserve (Fed), the European Central Bank (ECB), the Bank of England (BoE), and the Bank of Japan (BoJ)(all accessed on 17 November 2021) and CEIC (accessed on 2 November 2021).
Note: For panel a, euro, yen and sterling values were converted into United States dollars by using constant exchange rates from August 2021. In panel b,
the figure shows the total assets at the end of the quarter as a share of quarterly GDP (seasonally adjusted, annualized, current prices).

Asset purchase programmes in developing countries:
a paradigm shift in monetary policy?
The pandemic has marked a turning point for monetary policy in developing countries. Many central
banks introduced APPs for the first time as they experienced rapidly deteriorating financial conditions,large capital outflows and rising government financing costs. Over the course of 2020, 27 central
banks – 10 in Africa, 9 in Asia and 8 in Latin America and the Caribbean – announced or implemented
APPs.
While these programmes have been broadly modelled after those in developed economies, there areimportant differences in scope and purpose. Unlike central banks in developed countries, those inmost developing countries still had room to cut policy rates when launching APPs. The measures weremainly introduced in response to market turmoil in the early stages of the pandemic, when investor
panic, rising risk premiums and substantial capital outflows triggered a free fall in bond prices and aconsequent sharp increase in yields as well as currency depreciation. These APPs mainly aimed to boost
market confidence and reduce market dysfunctionality. Several central banks explicitly mentioned theneed to reduce the costs of COVID-19 (such as Angola, Bolivia, Cabo Verde and Rwanda). Others used
APPs to support fiscal needs (Ghana, Indonesia and Mauritius) (Fratto and others, 2021).

Many developing
country central banks
implemented APPs forthe first time56

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Developing countries’
APPs have been smallerand shorter in duration

Overall, developing countries’ APPs have been much smaller in scale and shorter in duration thanthose in developed countries.14 The size of most APPs in developing countries ranged from just above$300 million to around $30 billion, accounting for 0.3 per cent to 6 per cent of GDP.15 A few developing
country central banks conducted one-off purchases at various times between March and May 2020.
By the second quarter of 2021, the Reserve Bank of India was the only major developing country
central bank continuing with significant asset purchases (BIS, 2021a). While most developing country
central banks have focused on purchasing public securities denominated in local currencies, several
have also purchased private securities, bank bonds or even equities. The majority have conductedasset purchases in secondary markets but a few also resorted to purchasing bonds directly fromgovernments, reflecting their intention to support fiscal needs (Fratto and others, 2021).

Have asset purchase programmes met theirobjectives?
Stabilizing markets during financial turmoil
APPs have been effectivein addressing financial
distress…

Central banks’ large-scale APPs have become an important monetary policy tool to address financial
distress in a crisis. During both the global financial crisis and the COVID-19 pandemic, the programmes
helped to stabilize markets by providing liquidity, easing financial conditions and reducing uncertainty.
Through the large-scale purchase of securities, central banks quickly injected sufficient liquidity in
distressed markets, reducing risk premiums and facilitating arbitrage across asset classes. A fast andambitious response helped avoid fire sales and destabilizing price spirals that could spur the collapseof financial systems (Schnabel, 2021).
The response to the global financial crisis demonstrated that asset purchases are particularly effective
in filling liquidity gaps and stabilizing markets under certain conditions. First, when the balance sheetsof market participants are weak, resulting in liquidity disruptions and widening bid-ask spreads, central
bank purchases have a larger effect on prices. Second, APPs need to be very large and announced
quickly. When markets are crumbling and uncertainty is soaring, central banks have no time to bemodest and slow.16 Third, assets should be bought flexibly, allowing for targeted interventions asconditions in various market segments change over time. In the emergency phase, central banks
should purchase securities from the most distressed segments of financial markets.

14
15
16

A lack of deep and liquid capital markets in developing countries means that APPs are not always a viable policy
option.
By comparison, net purchases in the Federal Reserve’s latest quantitative easing programme amounted to about
20 per cent of GDP in the United States during March 2020 and October 2021.
For instance, the significant size of the Federal Reserve’s initial programme in 2008-2009, where total asset
purchases accounted for about 10 per cent of annual GDP, and the quick absorption of provided liquidity staunchedincreasing panic on financial markets.

CHAPTER II

57

THE MONETARY POLICY RESPONSE TO COVID-19

During the COVID-19 pandemic, developed country central banks generally followed these principles,drawing on lessons from the global financial crisis. In March 2020, financial markets across the world…due to central banks’swift and bold actions

were in turmoil as key funding markets experienced severe dislocations. The market for United States
Treasury securities, considered one of the world’s safest assets, saw a sharp sell-off as panicked
investors rushed to exchange them for cash (Schrimpf and others, 2020). In the European Union,liquidity dried up even in traditionally deep markets such as the German Bund market. Corporate bondspreads soared and stock prices plummeted.
In the face of acute financial stress, the major developed country central banks acted swiftly andboldly, announcing large programmes and buying more and different ranges of assets than during
earlier APPs. The Federal Reserve made its purchases of Treasury and mortgage-backed securities
open-ended. It also shed its unwillingness to purchase corporate bonds and joined the ECB, the Bankof England and the Bank of Japan in buying investment grade and later even lower-grade corporate
bonds (Cantú and others, 2021). In Europe, the newly announced PEPP allowed flexible purchases
based on markets and jurisdictions, which helped to break the cycle of worsening financial conditions
and reduce market panic. Following the announcement of the PEPP and the European Union recovery
fund, sovereign yield spreads in the euro area declined notably (figure II.3). At the same time, money
market rates realigned with the ECB policy rate. The purchases quickly restored market functioning,
safeguarding the transmission of monetary policy (Schnabel, 2021) (see box II.2).

Figure II.3

Euro area GDP-weighted sovereign yields and ICE swap rates
Percentage
0.7
Announcementof the PEPP

0.5

European Council decides toestablish a joint recovery fund

0.3

0.1

-0.1

-0.3

-0.5
Sep-19Dec-19Mar-20Jun-20

Sep-20Euro area GDP-weighted sovereign yields, 10 year

Dec-20Mar-21

Jun-21

Sep-21ICE Swap Rates, based on euros, 10-year tenor

Sources: UN DESA, based on datafrom the ECB and Federal Reserve
Bank of St. Louis (accessed on 11
November 2021).
Note: The ICE Swap Rate is
the principal global benchmark
for swap rates and spreads forinterest rate swaps; it is a proxy
for a risk-free rate. The PEPP is
the ECB’s Pandemic Emergency
Purchase Programme.

58WORLD ECONOMIC SITUATION AND PROSPECTS 2022

APPs in developing
countries reduced bondyields without weakening
currencies

New APPs by developing countries also promoted financial stability during the emergency phase of
COVID-19 (Fratto and others, 2021; Sever and others, 2020). It is difficult to disentangle the effectsof APPs from those of other monetary policy interventions and from spillovers from accommodative
macroeconomic policies in developed countries. Preliminary evidence, however, shows that APPs indeveloping countries have had some positive impacts as they reduced bond yields and boosted equity
prices during periods of market illiquidity. The IMF (2020) estimates that the size of the impact ofdomestic APP announcements on local currency sovereign bond yields ranged from 20 to 60 basis
points. In addition, decisive actions by developed and emerging market authorities may have supported
investor confidence, helping to reverse panic selling and capital outflows. At the same time, APPs did
not lead to a significant depreciation of currencies in developing countries.17

Benefits of APPs during
the crisis phase should
not mask potential risks

These positive experiences may motivate more central banks in developing countries to consider APPs
as an additional monetary policy tool, especially if conventional policy space becomes limited. The
recent successful experience with the programmes, however, may overstate their future effectiveness.
This is because they were implemented simultaneously with uniquely accommodative macroeconomic
easing in developed countries. Further, the financial markets did not anticipate these bold and timely
measures. The element of surprise potentially maximized the impact of APPs, preventing asset firesales and restoring market confidence. APPs in fact may only be suitable for developing countries undercertain preconditions, such as stable economic fundamentals, credible monetary policy frameworks
and good governance. Without these in place, APPs can carry substantial risks, contributing to higher
inflation, increasing depreciation pressures and raising risk premiums while potentially undermining
central bank credibility (Hofman and Kamber, 2020).
Box II.2

Backstopping sovereign bond markets via quantitative easing – the special case of
the euro area
In the European Economic and Monetary Union (EMU), monetary policy is conducted centrally for all
member States by the ECB, even though national governments continue to retain and exercise fiscal
sovereignty and issue debt denominated in their common currency, the euro. This institutional set-up
suggests an implicit responsibility for the ECB to guarantee the sovereign debt of individual member
countries, which makes it difficult to pursue and achieve the primary goal of price stability in the euroarea.
When financial turmoil due to the COVID-19 pandemic hit the EMU in March 2020, the resulting
downturn affected member States asymmetrically. The effects were especially pronounced in someSouthern European countries: Interest rate spreads between German and Italian sovereign bonds, forinstance, doubled from 140 basis points to 280 basis points in less than a month. This difference insovereign financing costs was in part due to varying perceptions of fiscal space in these two countries

17

This is likely due to the moderate size of the programmes and the fact that purchases were sterilized in manycases, with central banks intervening to offset the effect on exchange rates.

CHAPTER II

59

THE MONETARY POLICY RESPONSE TO COVID-19(Schnabel, 2021) and their potentially different ability to service existing debt during an economiccrisis.
While the ECB initially refused to address rising sovereign yield spreads, worsening financial
conditions prompted a public commitment from the ECB President to directly target sovereign spreads
with backstop support for all European sovereign bonds. Preliminary evidence suggests that thisannouncement contributed to shrinking sovereign bond spreads and rebounding stock prices evenmore than the ECB’s actual purchases of sovereign bonds during the immediate crisis phase (Corradinand others, 2021; Delatte and Guillaume, 2020). Similarly, during the European sovereign debt crisisof 2010-2013, when government bond yields spiked, the announcement of theoretically unlimited
purchase programmes lowered the spreads of the sovereign bonds of distressed countries without
programmes ever being activated (Acharya and others, 2019).
Compared to the large spreads during the European sovereign debt crisis, such as between German
and Greek bunds, the divergence in March-April 2020 was relatively contained. Spreads followed asteady downward trend after the initial jump (Ortmans and Tripier, 2021). The difference between thetwo episodes may be explained by the prompt monetary and fiscal policy response to COVID-19 as
well as significant EMU reform since the last crisis (Baldwin and others, 2015). Nonetheless, the sharp
spike in sovereign yield spreads in early 2020 showed that not all member States have public debt
with a safe asset status at all times. Without the ECB’s public and explicit commitment, borrowing
costs would remain higher for some countries, rendering them more vulnerable to external shocks
and affecting financial stability in the entire EMU. As a sustainable solution, debt mutualization via
European Commission bond issuance has been proposed (Brunnermeier and others, 2016) althoughseveral member States remain strongly opposed to it. In July 2021, member States agreed to pool debt
obligations of up to 750 billion euros to finance a newly created recovery fund.

Author: Lea Steininger, Vienna
University of Economics andBusiness

Fostering economic recovery
Once the initial objective of stabilizing financial markets is achieved, APPs are expected to foster
economic recovery in the short run. Empirical evidence from the global financial crisis suggests that
APPs have generally been effective in reducing long-term borrowing costs, which can be a necessary
but not sufficient condition for economic recovery. Several studies of the euro area, the United
Kingdom and the United States indicate that announcements of large-scale APPs were associatedwith significant reductions in the yields of government bonds and other assets (Gagnon, 2016;
Krishnamurthy and Vissing-Jorgensen, 2011; Andrade and others, 2016; Christensen and Rudebusch,2012). This translated to lower borrowing costs for the private sector.18
Several factors determine the effectiveness of asset purchases in reducing bond yields. First, theimpact is stronger when there are no entrenched deflationary pressures. If the yield curve is already18

Gilchrist and others (2015), for example, find that the efficacy of unconventional policy in lowering real borrowing
costs has been comparable to that of conventional policy.

APPs have lowered longterm borrowing costs…

60

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

relatively flat, asset purchases can barely reduce yields further. Second, a credible commitment by
the central bank to provide sustained monetary accommodation leads to a stronger effect on bondyields.19 When markets tend to believe that a central bank will not unwind asset purchases on a whim,lower bond yields can translate to lower borrowing costs for the economy as a whole especially during
the early phase of recovery. And third, targeting a variety of long-maturity assets can lead to a more
broad-based decline in borrowing costs. For example, the expansion of the ECB’s APP in 2015 at atime of relative financial calm lowered long-term euro area sovereign bond yields by about 30-50 basis
points within a day after the announcement. It also reduced the spreads of non-targeted corporate
bonds by about 20 basis points compared to risk-free rates.

…helping to kickstarteconomic recovery

Record-low long-term borrowing costs have supported economic recovery at least in the initialstage. For instance, the economy of the United States was out of recession by the end of 2009, after
the first round of quantitative easing was introduced in November 2008. Research estimates thatthe programme boosted economic output in the United States by 1-3 per cent (Kim, Laubach andWei, 2020). Preliminary evidence suggests that pandemic-related APPs have also helped kickstarteconomic recovery, allowing the major developed countries to emerge quickly from recession. A study
by Feldkircher and others (2021) finds that in the United States, APP-related monetary expansion
stimulated economic activity during the early stages of the crisis mainly through a rise in stock
market returns and an easing of financial conditions. Investment growth responded positively rightafter stimulus measures were introduced. Gross fixed capital formation in the euro area, the United
Kingdom and the United States expanded strongly in the third quarter of 2020 after contracting in theprevious two to three quarters. At the same time, consumption of durable goods recovered quickly inthe second half of 2020, especially in the United States.

Providing longer-term support to economic growth
APPs become lesseffective after the earlyrecovery phase

While there is broad-based consensus that APPs are an effective policy tool during periods of financial
distress and can also help to initiate economic recovery, the benefits of sustained use are less clear.
When normal market functioning is restored and the economy is recovering, the macroeconomic
effects, including through liquidity provision and portfolio rebalancing, will likely become lessimportant. Once long-term yields are at very low levels, new purchases do not provide significant
additional stimulus (see, for example, Gern and others, 2015; United Kingdom, House of Lords, 2021).
In addition, transmission channels to the real economy can be hampered by several structural factors,
such as the underpricing or mispricing of risks, adverse incentives for banks to lend to the real sector
and asymmetric wealth effects from rising asset prices sustained by APPs.

19

For example, the unconventional monetary policy measures adopted by the Bank of Japan between 2010 and 2012
had only a limited impact. Stronger effects were associated with measures adopted in 2013 when the Government
provided political backing for the Bank of Japan to pursue an aggressive monetary stimulus (Dell’ Ariccia andothers, 2018).

CHAPTER II

THE MONETARY POLICY RESPONSE TO COVID-19

61

The slow economic recovery from the global financial crisis in terms of both output and employment
suggests that the effectiveness of central bank asset purchases may dissipate quickly beyond thecrisis and early recovery phase. It may also point to the limitations of sustained monetary expansion
without supportive fiscal policies. Although monetary policies remained exceptionally accommodative
after the global financial crisis, investment failed to pick up significantly. In the euro area and United
Kingdom, for example, investment in equipment and machinery grew much more slowly from 2010 to2019 than from 1998 to 2007 (figure II.4).

Figure II.4

Annual growth in non-residential fixed investment in equipment and machinery
Percentage
6

5

5.3

5.4

4.3

4
3.8
3

2.9
2.6

2.4

2
1.9
1

0

United States
1998 – 2007

Euro area

United Kingdom

Japan

2010 – 2019

A persistently weak bank lending channel partly explains why large-scale asset purchases did notnecessarily boost private investment in major developed economies. Evidence on asset purchases
after the global financial crisis indicates that commercial banks responded in part by shifting theirportfolios into assets with low-risk weights rather than lending to the real economy. They did thisto minimize the requirements of regulatory capital. Fatouh and others (2019), for example, find thatbanks in the United Kingdom that received reserve injections through the Bank of England’s APP in
2009-2012 engaged in carry trade strategies towards bonds from other European Union sovereigns,
such as Greece, Italy, Ireland, Portugal and Spain.20 In the euro area, Horst and Neyer (2019) find that20

Sources: UN DESA, based on datafrom CEIC, Eurostat and Federal
Reserve Economic Data (FRED).
Note: Growth rates are calculated
by taking geometric means ofinvestment (in constant prices)during the reference periods. Dataon the United States include only
private investment.

For the United States, Rodnyansky and Darmouni (2015) did not find any impact on bank lending when asset
purchases targeted treasuries in the second phase of quantitative easing after the global financial crisis. Whenmortgage-backed securities were targeted, as in the first and third phases of quantitative easing, there was apositive effect on lending.

Cheap liquidity hasoften not stimulatedbank lending to the real
economy…

62

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

increasing excess reserves can have no or even a contractionary impact on the supply of bank credits
because banks may face rising marginal costs from holding deposits due to regulatory issues.
Preliminary evidence from the United States during the COVID-19 crisis also suggests APPs play alimited role in enhanced bank lending. Bank lending in 2020 was hampered by financial constraints
at the firm level rather than the bank-level constraints observed in 2008. Many banks in the UnitedStates entered the pandemic in strong financial positions, well capitalized and with ample liquidity.
Since APPs can mainly relax financial constraints at the bank level rather than at the firm level, theprogrammes have likely been less effective (Sims and Wu, 2020). Similarly, since bank reserves weremuch larger in 2020 than in 2008, the direct effect of a further increase in reserves on the liquidity
premium is smaller, reducing the overall effectiveness of APPs (Occhino, 2020).

…while encouraging
the creation of “zombie
firms” with low
productivity

Abundant liquidity, ultralow interest rates and reduced financial pressure have also led to a rise in socalled “zombie companies”, defined as firms that are unable to cover debt-servicing costs from current
revenue over an extended period. Banerjee and Hofmann (2018) find that such companies deleveraged
at a slower pace after the global financial crisis. On the one hand, weak banks allowed them to rollover loans rather than writing them off. On the other hand, low interest rates raised incentives forassuming excessive risks or taking bank loans for low-productivity investments that would have been
deemed infeasible with higher interest rates. The greater share of zombie companies is likely to haveweighed on aggregate productivity not only because these firms are less productive than others but
also because they may crowd out investment and employment in healthy firms (Caballero and others,
2008; Adalet McGowan and others, 2017).

Firms use additionalliquidity for stockbuy-backs rather than
productive activities

An additional factor holding back investment is a massive increase in stock buy-backs. While in many
countries, including China, Japan, France and the United Kingdom, the volume of stock repurchases has
risen considerably since the global financial crisis, the trend has been most pronounced in the UnitedStates (Aramonte, 2020). Amid persistently low interest rates and large tax cuts in 2017, share buybacks reached a record level prior to the COVID-19 crisis (figure II.5). After a pause in the early stagesof the pandemic, firms resumed these. In the second quarter of 2021, buy-backs among companies
listed on the Standard and Poor’s (S&P) 500 index totalled $199 billion, equivalent to about 3.5 per centof the GDP of the United States. This marked an increase of 124.3 per cent from the second quarterof 2020 and was only 11 per cent below the all-time high of $223 billion in the fourth quarter of 2018.
Buy-backs have increasingly been debt financed, contributing to a faster rise in corporate leverageand increasing financial fragility. In 2019, about a quarter of firms bought back stocks by issuing
new debt, compared to only 4 per cent of companies in 2007. While pushing up stock prices, largescale buy-backs may negatively affect capital accumulation and reduce firms’ abilities to cope with an
economic downturn, especially if they are funded with new debt. Moreover, increases in stock prices
often just benefit senior corporate executives and major shareholders while depressing investments
in productive capital.

CHAPTER II

63

THE MONETARY POLICY RESPONSE TO COVID-19

Figure II.5

Stock buy-backs in the United States and the financing tools of firms that boughtback stocka) Stock buy-backs, market valueb) Financing tools of firms that bought back stock

Billions of United States dollars

Percentage

900

Debt, no equity

Equity, no debt

Debt and equity

Prolonged implementation of APPs will likely reduce their effectiveness. First, the signalling effectgradually weakens as recovery progresses and market participants adjust their expectations. Evidence
suggests that late-stage programmes shift expectations less than earlier programmes (Yu, 2016).

Prolonged
implementation of APPs
could be self-defeating

Second, low long-term yields could convey a negative signal about economic prospects, undermining
consumer and investor confidence. Third, wealth effects may not boost private consumption
significantly since wealthy households with very low marginal propensity to consume primarily benefit
from rapidly rising asset prices. As a result, rising wealth is unlikely to translate into significantly
stronger aggregate demand. Separately, persistent low rates due to APPs may impair bank profitability
and negatively affect credit supply as net interest margins become compressed (Hesse and others,2018).

Side effects and risks of large-scale asset
purchase programmes
Large-scale APPs have played an important role in stabilizing financial markets and reviving
economies following the COVID-19 shock. A prolonged period of ultraloose monetary policies has
also created macroeconomic and financial vulnerabilities, however. If not managed well these could
undermine global recovery. By continuously providing an immense volume of liquidity through asset
purchases, central banks risk feeding inflationary pressures while further encouraging search-for-yieldand speculative behaviour among investors. This is due to the underpricing of risk, which aggravates

19

17

20

15

20

13

20

11

No debt, no equity

20

09

20

07

20

05

20

03

20

01

17

15

13

11

09

07

05

03

19
20

20

20

20

20

20

20

20

01

99

97

Source: Aramonte, 2020.

20

20

19

19

19

95

0

20

100

99

200

20

300

97

400

19

500

19

600

19

700

95

100
90
80
70
60
50
40
30
20
10
0

800

APPs adversely affectwealth distribution
and may increase
macrofinancial risks

64WORLD ECONOMIC SITUATION AND PROSPECTS 2022

the misallocation of capital and increases financial stability risks. At the same time, concerns havebeen growing over the distributional effects of APPs as rising asset prices disproportionately benefit
wealthy households.

Macroeconomic effects
Inflationary concerns
When major developed country central banks began large-scale asset purchases after the global
financial crisis, there was widespread concern that the expansion of balance sheets and resulting
increase in the monetary base would trigger higher inflation and potentially de-anchor inflation
expectations.21 Figure II.6 illustrates how the monetary bases in Japan, the United Kingdom, the UnitedStates and the euro area have increased since 2008 (including a jump since March 2020). Massive
expansion of the monetary base, however, has not led to higher inflation in these economies. On thecontrary, headline inflation has generally remained low, frequently falling short of central banks’ 2 percent target rate. In the decade after the crisis, consumer price inflation averaged 2.3 per cent in the
United Kingdom, 1.6 per cent in the United States, 1.3 per cent in the euro area and 0.3 per cent inJapan.22

Concerns about higher
inflation after the global
financial crisis proved
unfounded…

An evaluation of APPs launched in response to the global financial crisis suggests that the impact
on inflation has been very limited past the medium term. For instance, based on options data for theUnited States, Reis (2016) shows that while early rounds of quantitative easing had a sizeable effecton expected inflation, further rounds had little or no effect. Similarly, euro area evidence indicates that
APPs put upward pressure on inflation only during the first two years (Gambetti and Musso, 2017;
Clemens and others, 2017) and that APP announcements raised inflation expectations only modestly
by 20 to 30 basis points (Rieth and Gehrt, 2016).

21
22

When purchasing long-term securities from financial institutions, central banks create new bank reserves, thus
expanding the monetary base (i.e., the sum of currency in circulation and bank reserves).
Core inflation, excluding volatile food and energy prices, was even lower.

CHAPTER II

THE MONETARY POLICY RESPONSE TO COVID-19

65

Figure II.6

Base money in selected major developed economies
Index, January 2008 = 100

1200
1000
800
600
400
Sources: UN DESA, based on datafrom the Federal Reserve Bank of
St. Louis, Bank of England, Bank ofJapan and ECB (accessed on 30
October 2021).

200

20

19

21
nJa

nJa

nJa

17

18
nJa

n-

15

14

16

Ja

nJa

nJa

nJa

12

11

10

09

13
nJa

nJa

nJa

nJa

nJa

Ja

n-

08

0

United States: monetary base

United Kingdom: narrow money (notes and coin) and reserve balances

Japan: monetary base

Euro area: monetary base

Why has the rapid expansion of the monetary base not led to significantly higher inflation? The main
reason is that after the initial crisis phase, most of the additional liquidity created by central banks
did not reach the real economy. In fact, the global financial crisis weakened financial intermediation
with consequences felt beyond the immediate crisis phase. Rather than increasing credit flows tohouseholds and firms, banks and other financial institutions used additional liquidity to shore up theirbalance sheets (figure II.7a). For their part, financially stressed households and firms were often
reluctant to borrow or invest. In the United States, for instance, growth of total bank credit in the 10
years after the crisis was weaker than during the decade before the crisis (figure II.7b). Similar trends
were observed in the United Kingdom and the euro area.23
Monetary conditions today, however, differ considerably from those after the global financial crisis.
Inflation risks are now emerging as a concern in many developed economies. Unlike during the global
financial crisis, economies have faced both demand-side and supply-side shocks during the pandemic.
While the demand-side shocks dissipated by the third quarter of 2020, the supply-side shocks persist
in the major developed economies. The rapid increases in headline inflation over the past year are
primarily due to quickly recovering demand amid strongly supportive fiscal policies and across-theboard supply-side disruptions, including massive dislocation in labour markets. Consumer demand in
23

From a monetary perspective, the rapid increase in the monetary base was offset by declines in the money
multiplier and the money velocity.

...but monetaryconditions today are very
different

66WORLD ECONOMIC SITUATION AND PROSPECTS 2022

the United States and the euro area recovered much faster than supply. Unfortunately, central banks
do not have specific tools at their disposal to address supply-side bottlenecks such as labour gaps,
shortages of products such as semiconductors, or other supply-chain disruptions impeding the flow ofgoods and services and increasing inflationary pressure.
Notwithstanding prevailing supply-side constraints, APPs may indirectly exacerbate supply-side
pressures and contribute to inflationary pressures if bank lending channels remain weak in the nearterm and firms face constraints in increasing investments and boosting productive capacity, as
discussed above. To ease supply-side bottlenecks and inflationary pressures, it will remain critical for
central banks in the developed economies to ensure that banks extend credit to the real sectors of theeconomy and do not just finance stock buy-backs or financial speculation.

Figure II.7

Reserves of depository institutions and growth of total loans in the United Statesa) Reserves of depository institutionsb) Growth of total loans

Billions of United States dollars

Percentage
15

QE1

4,500

QE2

QE3

QE4

4,000

10

3,500
3,000

5

2,500
2,000

0

1,500
1,000

-5

500
1Jan-18
8

2Jan-200n-n-Average growth of total loans, 1998 – 2007

Ja

1Jan-166n-Growth of total loans

Required reserves of depository institutions

Ja

1Jan-14
4n-

Excess reserves of depository institutions

Ja

1Jan-122n-Ja

1Jan-100n-Ja

0Jan-088n-Ja

0Jan-06
6n-Ja

0Jan-04
4n-Ja

0Jan-022n-Ja

0Jan-00
0n-

Ja

9Jan-98
8

n-

21
n-

Ja

19
l-

Ja

18
n-

Ju

16
l-

Ja

15
n-

Ju

13
l-

Ja

12
n-

Ju

10
l-

Ja

09
n-

Ju

08
r-

Ap

Ja

06
tOc

-10

Ja

0

Average growth of total loans, 2008 – 2017
Source: UN DESA, based on data from the Federal Reserve Bank of St. Louis(accessed on 30 October 2021).
Note: QE1 to QE4 are the Federal Reserve’s quantitative easing programmes.

Source: UN DESA, based on data from CEIC (accessed on 30 October 2021).

CHAPTER II

THE MONETARY POLICY RESPONSE TO COVID-19

67

Asset prices and financial instability
While asset prices are affected by many factors other than monetary policy, the additional liquidity fromlarge-scale APPs has fuelled asset price inflation in virtually every asset class. The most immediate
impact has been on bond prices. Over 2020, the average price of the S&P Global Developed Sovereign

APPs have fuelled asset
price inflation

Bond Index increased by 12 per cent compared to about 2 per cent per year from 2015 to 2019.24 Pricesof corporate bonds have also experienced sharp increases. After a dip in March 2020, the returns
rebounded quickly, growing by 12 per cent in the United States and 5 per cent in the euro area (figure
II.8b).25
As investors rebalance their portfolios and search for higher risk-adjusted returns, prices of other asset
classes have increased as well. Stocks have recorded especially large gains in the United States. In the

Equity prices have soared
during the pandemic…

10 years after the first round of quantitative easing implemented by the Federal Reserve in responseto the global financial crisis, the S&P 500 and the NASDAQ Composite Index rose by over 200 per centand nearly 380 per cent, respectively. By comparison, both indices had not recorded gains in the 10
years before that point despite some fluctuations (figure II.8a). Since the Federal Reserve announced
its latest APP in March 2020 to combat the COVID-19 crisis, the S&P 500 has surged by 75 per centwhile the NASDAQ Composite Index has doubled (figure II.8b). Equity prices have also moved higher
elsewhere albeit less strongly than in the United States. In the European Union, for example, the Dow
Jones Euro Stoxx Index recovered quickly from the pandemic, rising by almost 70 per cent during
March 2020 and November 2021 (figures II.8a and II.8b).26
Ultraloose monetary policies have driven down mortgage rates and pushed up real estate prices since
the global financial crisis and particularly since the onset of the pandemic. Globally, residential property
prices adjusted for inflation were 6 per cent higher in the first quarter of 2021 than in 2019. Again, priceincreases have been particularly strong in the United States, where the Case-Shiller Home Price Indexrose by a staggering 23 per cent between March 2020 and July 2021 (figure II.8b). Historically low
interest rates have also boosted the prices of other financial products, such as high-yield bonds, andprompted increased speculative activities in meme stocks and cryptocurrencies. The price of the S&P
500 High-Yield Corporate Bond Index increased by 38 per cent from March 2020 to October 2021; theprice of Bitcoin, the dominant cryptocurrency, soared by nearly 80 per cent during the same period.

24
25
26

Based on the S&P Global Developed Sovereign Bond Index (accessed on 29 October 2021).
As of September 2021.
Unlike the major United States stock market indices, the Dow Jones Euro Stoxx remains lower than it was before
the global financial crisis and the dot-com bubble.

…along with prices of realestate, bonds and otherassets68

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure II.8

Asset valuation changes and asset composition in the United States and Europe(a) Asset valuation changes since October 1998
UNITED STATESEUROPE

Index, October 1998 = 100

Index, October 1998 = 100
QE1 QE2 QE3

QE4

(1)

(2)

(3)

250

800

200
600
150
400

2

0
Oct-20t-1

8
Oct-18

Oc

t-

1

6
Oct-16

Oc

t-

1

4
Oct-14

Oc

t-

1

2
Oct-12

t-

Oc

1

0
Oct-10

t-

Oc

0

8
Oct-08

t-

Oc

0

6
Oct-06

t-

Oc

0

4
Oct-04

t-

Oc

Oc

t-

Oc

0

2
Oct-02

t-

Oc

9
tOc

NASDAQ Composite Index

S&P 500

08
Oct-98

t-

Oc

2

0
Oct-20

t-

Oc

1

8
Oct-18

t-

Oc

1

6
Oct-16

t-

Oc

1

4
Oct-14

t-

Oc

1

2
Oct-12

t-

Oc

1

0
Oct-10t-08
Oct-08t-0

6
Oct-06

Oc

0
t-

Oc

Oc

t-

Oc

0

t-

Oc

0

tOc

9

4
Oct-040

2
Oct-0200
Oct-0050

8Oct-982000
Oct-00100

Dow Jones Euro Stoxx Index

ICE BofA US Corporate Index Total Return

S&P Eurozone Investment Grade Corporate Bond Index*

Case-Shiller Home Price Index

Euro area residential property prices, real(b) Asset valuation changes during the COVID-19 pandemic
UNITED STATESEUROPE

Index, 1 March 2020 = 100

Index, 1 March 2020 = 100

170
130
150
110

130
110

90

NASDAQ Composite Index

21
pSe

21
l-

ay
M

ar

Ju

1
-2

1
-2

21
M

nJa

20
v-

No

20
pSe

20
lJu

ay
M

ar

-2

-2

0

0

70
M

21
Sep-21pSe

21
Jul-21lJu-

21
May-21

ay

M

M

ar

-

21
Mar-21

2

1
Jan-21

nJa

20
Nov-20v-

No20
Sep-20p-

2
lJu

S&P 500

Se

0
Jul-20

-2
ay

M

M

ar

-2

0
Mar-2070

0May-2090

Dow Jones Euro Stoxx Index

ICE BofA US Corporate Index Total Return

S&P Eurozone Investment Grade Corporate Bond Index

Case-Shiller Home Price Index

Euro area residential property prices, real

Sources: Bank for International Settlements (accessed on 19 October 2021), Federal Reserve Bank of St. Louis (accessed on 11 November 2021), Investing.com(accessed on 20 October 2021) and S&P Global (accessed on 29 October 2021).
Notes: S&P = Standard and Poor’s. BofA = Bank of America. Panel a, right figure: (1) The ECB engaged in the large-scale purchase of covered bonds in May 2009;(2) the ECB announced an expanded APP in January 2015; (3) the ECB announced its PEPP in March 2020. *The S&P Eurozone Investment Grade Corporate Bond Index
starts from December 1999 and is thus indexed by using December 1999 = 100. QE1 to QE4 are the Federal Reserve’s quantitative easing programmes.

THE MONETARY POLICY RESPONSE TO COVID-19

69

The valuations of different financial assets, especially equities, appear increasingly detached from

Asset bubbles may burst
due to abrupt monetary
policy shifts

CHAPTER II

underlying fundamentals. In the United States, for instance, the cyclically adjusted price earnings(CAPE) ratio, which measures the relative price of equities by comparing their current price to theaverage 10-year earnings, has risen by over 50 per cent since April 2020, more than after any otherrecession in the past 120 years.27 As a result, equity markets in the United States have rarely seemed
more overvalued than they are now, with CAPE ratios approaching levels only seen prior to the burstingof the dot-com bubble in 2001.28
This has spurred fears of ever-expanding asset price bubbles as the disconnect between financial
markets and economic fundamentals continues to widen. Table II.1 shows that while investment indeveloped economies bounced back after the collapse in the second quarter of 2020, the upward
momentum slowed significantly in the first half of 2021. Despite some recovery in investment during
the second half of 2020, global economic conditions are currently characterized by persistent supplyside bottlenecks that have been feeding inflationary pressures. It is likely that supply-side bottlenecks
will persist, in the United States and other economies, at least until the first quarter of 2022. If monetaryconditions shift abruptly, with the Federal Reserve quickly tapering asset purchases and raising policy
rates, asset price bubbles may burst. Sharp market corrections could trigger a rising number ofbankruptcies and cause substantial macroeconomic damages, with adverse global spillover effects.

Table II.1

Changes in quarterly gross fixed capital formation
Percentage

2019 Q3

2019 Q4

2020 Q1

2020 Q2

2020 Q3

2020 Q4

2021 Q1

2021 Q2

Euro Area

0.4

-0.5

-4.3

-12.3

14.8

2

0.8

0.7

United Kingdom

1.3

-1.6

-1.2

-20.7

19

4.4

-1.8

-0.5

United States

0.7

0

-0.1

-7.2

5.2

3.7

2.3

0.5

Japan

0.9

-3.1

0.2

-3.2

-2

2.9

-0.9

1.4

Financial stability concerns are compounded by the higher risk exposure of investors as APPs havepushed market participants towards higher-yielding assets. As a result, portfolios have become moresensitive to interest rate changes and market volatility. Excessive risk-taking may accelerate any
negative shock, leading to broader financial instability. Since leverage on corporate balance sheets was

27
28

Data on the CAPE ratio for the United States are provided by Robert Shiller.
Stock market valuations in other large economies are generally not as high as in the United States but in somecases still appear stretched in view of subdued economic prospects.

Sources: CEIC and OECD(accessed on 29 October 2021).
Note: Data are quarter-on-quarter
growth rates of gross fixed capitalformation (constant prices,
seasonally adjusted). Euro area
data exclude Cyprus, Ireland andMalta.

70

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

already at an all-time high before the pandemic, the latest round of APPs may have further aggravatedfinancial stability risks.29

APPs affect thecomposition of global
liquidity and climate risks

In addition to inflating asset prices, APPs can undermine financial stability in other ways (Caldentey,2017). While base money expansions did not translate into more money circulating in the economy
at large, asset purchases have had an indirect impact on the composition of global liquidity. Throughthe portfolio balancing effect, they have altered the relative profitability of investing in various asset
classes, strengthening the international bond market. Rapidly growing bond markets have facilitatedadditional debt issuances and the build-up of the asset management industry, which in 2020 controlled
about $103 trillion of assets globally, up by 11 per cent from 2019 (Heredia and others, 2021). The highlevel of concentration, interconnectedness and procyclicality of the asset management industry poses
substantial risks to financial stability (Caldentey, 2017). Moreover, central banks’ purchase operations
and portfolio holdings have climate implications that may trigger physical and financial risks given
market failure and externalities (box II.3).
Box II.3

Greening asset purchase programmes to mitigate climate risks
Asset purchases by central banks are not necessarily market neutral. When central banks purchasebonds, they tend to give greater weight to sectors with a higher share of carbon emissions. This isbecause highly carbon-intensive firms are overrepresented in the bond market as they can easily use
their large holdings of fixed assets as collateral for issuing bonds (Papoutsi and others, 2021) (figure
II.3.a). For instance, the ECB has exhibited a tendency to purchase bonds in carbon-intensive sectors
like utilities and transportation (Barker, 2015; Matikainen and others, 2017). As of July 2020, carbonintensive sectors comprised 62.7 per cent of the value of outstanding corporate bonds held by the ECB(Dafermos and others, 2020a). Likewise, 57 per cent of the value of all bonds in the Bank of England’s
Corporate Bond Purchase Scheme was from carbon-intensive sectors as of June 2020 (Dafermos andothers, 2020b).

29

The adverse effect of asset purchases on bank profitability has also been seen as a potential financial stability risk
but so far these concerns appear largely unfounded.

CHAPTER II

71

THE MONETARY POLICY RESPONSE TO COVID-19

Figure II.3.a

Sector shares of the market portfolio, ECB holdings and emissions
Percentage
0

10

0

Emissions

20

30

40

50

60

70

Automobile
Agriculture
High-carbon manufacturing
Utilities
Transportation
Other manufacturing
Services
Market portfolio

ECB holdings

The carbon bias of APPs has had undesirable side effects. When central banks purchase bonds
irrespective of their ecological footprint, they provide an implicit subsidy to fossil fuels and otherhigh-emissions industries, encouraging investment in these sectors. Climate change, in turn, poses
different risks to the stability of the financial system, including physical, liability and transition risks.
Tackling climate change requires a “whole-of-government” approach. While central banks may not beat the very centre of climate policies, as public institutions, they play an important role in promoting thetransition to a low-carbon economy. Monetary policies should do more to address climate-related risks
and provide necessary incentives to green the financial system. Central banks have taken some action
by forming the Network for Greening the Financial System, with a membership of 100 central banks
and financial regulators as of November 2021. Its primary objectives include integrating sustainability
into central bank portfolio management.
Central banks ought to acquire low-carbon assets, such as green bonds, sustainability bonds, or assetsthat meet minimum environmental, social, and governance (ESG) standards. The ECB, for example,
has made green bonds and sustainability-linked bonds eligible for central bank operations (ECB,2021). Sweden’s Riksbank announced that it would “only offer to purchase bonds issued by companies
deemed to comply with international sustainability standards and norms” from January 2021 onwards(Riksbank, 2020). Similarly, in November 2021, the Bank of England published details of how it willgreen its Corporate Bond Purchase Scheme (Bank of England, 2021). Such policy moves will promote
the growth of green financial markets and reduce the cost of capital for investments in clean energy
relative to carbon-based energy. Moving beyond climate considerations, central banks can also play amore active role in fostering sustainable investments more broadly.

Source: Papoutsi, Piazzesi andSchneider, 2021.

72

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Distributional effects: making the rich richer?
Higher asset prices
have disproportionately
benefited the rich…

After early studies largely focused on the macroeconomic and financial effects of APPs, interest in
their distributional impact has grown in recent years (for example, Bernoth and others, 2016; Metzger
and Young, 2020; Bonifacio and others, 2021; BIS, 2021b). As discussed, central bank asset purchases
affect financial markets and the real economy, and, consequently, distributional outcomes, in various
ways. In principle, faster economic growth and improved job markets, which are key longer-term
objectives of APPs, should benefit low-income groups. Experiences in the past decade, however, haveraised doubts about the long-run positive effects of the programmes on output and employment.
While they have boosted prices across a broad range of asset classes, these have disproportionately
benefited wealthy households as they not only hold more assets but also larger shares of risky assets
than other groups. While the distributional impact of APPs is not uniform across countries and time
periods, the programmes have likely increased wealth inequalities, especially in developed countries.

…as income and wealthcomposition differ acrossgroupsAPPs affect different groups unevenly due to large variations in sources of income. Capital gains
account for a significant share of total income for top earners, especially the top 1 per cent, but are
negligible for other groups (figure II.9a). Low-income earners, in turn, rely heavily on transfers andwelfare programmes. The sharp increase in asset prices has thus primarily lifted the incomes of thewealthy.30
Another factor in the impact of APPs on wealth distribution is that different groups own varying asset
types. Wealthy households hold a large share of their wealth in financial assets, especially stocks (figure
II.9b), which at least in the United States have recorded stronger price gains than other asset classes
in the past two decades.31 In addition to directly owning shares of publicly listed companies, many
wealthy households invest in private equity and venture capital firms, which have also experienced
sharp increases in value. By contrast, less wealthy individuals hold most of their assets in real estate,
where prices have grown at a slower pace.
Rapid but uneven increases in asset prices, coupled with differences in the composition of asset
holdings across wealth groups, imply that wealthy households have reaped most of the direct gains
from APPs. In the United States, the wealthiest 10 per cent of households held nearly half of all assets
in stocks in 2016, while the corresponding figure for the bottom 20 per cent was only 2 per cent (figure
II.9b). Assuming this asset composition still holds, the top 10 per cent in the United States may haverecorded wealth gains of about 44 per cent since March 2020, compared to only 15 per cent for thebottom 20 per cent as of October 2021. In the European Union, likewise, the top 10 per cent has held a30
31

By contrast, transfer or welfare programmes usually vary little with economic activity (Amaral, 2017).
In fact, ownership of stocks is heavily concentrated among the wealthiest households. In the United States, over
90 per cent of those in the top 10 per cent of the wealth distribution owned stocks in 2019 compared with 21 percent of those in the bottom 25 per cent (Smart, 2021).

CHAPTER II

73

THE MONETARY POLICY RESPONSE TO COVID-19

Figure II.9

Income and asset composition in the United States and Europe(a) Income composition
UNITED STATES: INCOME BEFORE TRANSFERS AND TAXESEUROPEAN UNION: GROSS INCOME

Percentage

Percentage

100

100

80

80

60

60

40

40

20

20

0

0-20%

20-40%

40-60%

60-80%

80-100%

Top 10%00-20%

20-40%

60-80%

80-100%

Employee income

Income from self-employment

Pensions

Financial income
Transfers

Rental income

Income groups
Social insurance benefits

Dividends

40-60%
Income groups

Other incomes

Cash wages and salaries
Capital gains
Business income
Employee’s contributions to pensions, health insurance and taxes

Unemployment benefits(b) Asset composition
UNITED STATESEUROPEAN UNION

Percentage

Percentage

100

100

80

80

60

60

40

40

20

20

0

Bottom 20%

20% – 90%0

Top 10%Bottom 20%

Wealth groups

20% – 90%

Top 10%Wealth groups
Real estate

Bonds

StocksLiquidOther

Sources: Panel a, left: United States, Congressional Budget Office, Distribution of Household Income 2017 (accessed on 25 October 2021). Panel a, right: Lenza andSlacalek, 2018. Panel b: Bonifacio and others, 2021.

74WORLD ECONOMIC SITUATION AND PROSPECTS 2022

larger share of wealth in stocks than other groups and is estimated to have recorded stronger wealthgains since the beginning of the pandemic.32

The top 1 per cent haveexperienced the largest
wealth gains

The asymmetric effect of APPs is more striking when considering absolute wealth gains. Between
the first quarter of 2020 and the second quarter of 2021, the top 1 per cent of income earners in the
United States registered net wealth gains of about $3.5 million per person, while the bottom 20 per centrecorded only an increase of about $5,300 per person.33 Longer-term wealth trends provide further
evidence of the negative distributional effects associated with APPs. In the 10 years before the global
financial crisis, the wealth of the top 20 per cent and the bottom 20 per cent of income earners in the
United States grew at a similar pace (figure II.10). After three rounds of quantitative easing, wealthtrends diverged sharply among income groups, widening further after a fourth round in 2020.34

Figure II.10

Growth of wealth across income groups in the United States
Index, Q1 1998 = 100
QE1

QE2

QE3

QE4

450
400
350
300
250
200
150

Sources: UN DESA, based on theFederal Reserve Distributional
Financial Accounts (accessed on
21 October 2021).
Note: QE1 to QE4 are the Federal
Reserve’s quantitative easing
programmes.

Bottom 20%

32
33
34

Top 2 – 20%

20
20

18
20

16
20

14
20

12
20

10
20

08
20

06
20

04
20

02
20

00
20

19

98

100

Top 1%The smaller gap in wealth gains in the European Union compared to the United States is consistent with Domanski,
Scatigna and Zabai (2016), who argue that increases in house prices tend to decrease inequality if home ownershipprevails, while increases in other asset prices tend to increase inequality.
Calculated based on data from the Federal Reserve’s Distributional Financial Accounts (accessed on 4 October2021).
Other factors, such as the slow and uneven labour market recovery from the global financial crisis, contributed todiverging wealth trends.

CHAPTER II

75

THE MONETARY POLICY RESPONSE TO COVID-19

Developed countries other than the United States that have implemented APPs have experienced
similar trends in income and wealth inequalities. For instance, Bernoth and others (2016) indicatethat ECB asset purchases have likely increased wealth inequality in the euro area due to increases in

APPs have widened
inequalities in several
developed economies

stock prices. In the United Kingdom, research finds that positive effects from APPs are higher at the
top of wealth and income distribution and lower at the bottom. The richest 10 per cent of households
gained, on average, £350,000 during the first round of quantitative easing in 2009, more than 100
times the gains seen by the poorest 10 per cent (United Kingdom, House of Lords, 2021). The Bank ofJapan’s QE and QQE (quantitative and qualitative easing) programmes increased income and wealthinequality through a rise in the price of financial assets that benefited primarily richer income groups
and widened income gaps among different income groups (Yoshino, Taghizadeh-Hesary and Shimizu,2018). In a recent speech, the Governor of the Bank of Canada admitted that quantitative easing canwiden wealth inequality as the programmes boost the value of assets that are not evenly distributed
across society (Macklem, 2021).
Since APP effects are primarily transmitted via higher asset prices, the programmes also have an
implicit gender bias, favouring men over women. On average, women have lower incomes and lesswealth. They tend to be more risk averse, with ownership rates of risky financial assets lower for
women than men. APPs are thus likely to benefit men more strongly than women (Metzger and Young,2020). When APPs are sustained over a long period, they can also increase intergenerational inequality.
In the United States, for example, older persons tend to be more active in investing in equity markets. In
2019, 43 per cent of stocks in value terms were owned by investors aged 65 and above (Smart, 2021).
Older persons may thus benefit disproportionally from asset price increases.35
Besides boosting asset prices, APPs also have distributional implications by affecting inflation,
employment and wages. In most cases, however, the adverse distributional effects from higher asset
prices likely outweigh the positive effects associated with modest employment and wage gains.36

35

36

APPs impact pension funds as well but the actual impacts remain inconclusive. For those under defined
contribution schemes, although APPs could increase the prices of both bonds and equities held in the pension
funds, a fall in yields will reduce the annuity rate. For those under defined benefit schemes, while APPs could
increase the value of their assets, they could also raise the value of their liabilities due to a fall in yields (BoE, 2012).
One study finding a slightly positive overall effect is by Lenza and Slacalek (2018). Based on a sample of four
European countries, they estimated that a sudden increase in asset purchases could lower the unemployment
rate by 0.7 percentage points. This would mainly benefit the incomes of the bottom 20 per cent of households andslightly reduce the Gini coefficient.

APPs may contributeto gender andintergenerational
inequalities

76

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Spillover effects on developing countries
Developed countries’
APPs have createdsignificant spillovers

The large-scale APPs introduced by developed country central banks have had significant spillover
effects on developing countries through several well-established channels. First, by boosting aggregate
demand in the originating country, APPs may generate positive spillovers for developing countries
through stronger demand for their goods and services.37 Second, since APPs reduce long-term bondyields in developed countries, investors turn to assets in developing countries for higher risk-adjusted
returns. Consequently, yields in developing countries are expected to fall as asset prices rise.38
Third, in a world of well-integrated financial markets, APPs are expected to boost global liquidity.39
Fourth, APPs can impact developing countries’ exchange rates, especially where currencies are fully
convertible (Fic, 2013).

Countercyclical capital
inflows could benefit
developing countries…

The additional liquidity generated by central bank asset purchases can benefit developing countries if
their business and financial cycles are synchronized with those of developed countries. In this case,stronger capital inflows into developing countries should ease their financing constraints. During both
the global financial and COVID-19 crises, developing countries initially experienced sharp reversals
of capital flows as capital flew to safety and liquidity dried up (figure II.11). Aggressive monetaryeasing measures in developed countries, including the introduction of APPs, helped alleviate financial
conditions, supporting a revival of portfolio capital flows to developing countries (Batini, 2020).

…while procyclical capital
inflows raise overheating
and financial stability
risks

APPs can increase the procyclicality of capital flows when the origin and destination countries are indifferent phases of the business cycle. In this case, APP-induced capital flows to developing countries
raise the risk of overheating, sudden stops and reversals, increased inflationary pressure and excessive
credit growth. This may require domestic policy tightening, which, at least temporarily, may attracteven more capital inflows. In the aftermath of the global financial crisis, many developing economies
saw growth rebound whereas the major developed countries experienced a slow and fragile recovery.
Developed country central banks responded with even larger APPs, triggering major capital flows todeveloping and emerging economies. The Brazilian economy, for example, experienced a sharp rise inequity prices, credit growth and currency appreciation pressures during the post-APP period (Barroso,da Silva and Sales, 2016). China also observed rising equity prices and inflationary pressure andresponded with monetary tightening (Chen and others, 2015).

37
38

39

Empirical analysis finds that net exports of developing countries do not respond significantly to APPs in developed
countries, however, because APP-induced currency appreciation in developing countries offsets increasing
demand for their exports (Bhattarai, Chatterjee and Park, 2021).
Fic (2013) studied APPs launched by the Federal Reserve, Bank of England, Bank of Japan and ECB during 2018and 2012, estimating that the programmes could have decreased long-term yields by about 175 basis points in
Brazil, and about 25 basis points in China, India and the Russian Federation. Moore and others (2013) estimatethat a 10-basis-point decline in long-term United States Treasury yields results in a reduction of approximately 1.7
basis points in emerging market economies’ government bond yields.
For a sample of 60 developing countries, Lim, Mohapatra and Stocker (2014) estimated that APPs in the UnitedStates accounted for more than 20 per cent of the total increase in cross-border capital flows during 2009 and2013.

CHAPTER II

77

THE MONETARY POLICY RESPONSE TO COVID-19

Figure II.11

Capital flows to G20 developing countries
Billions of United States dollars, by quarter
400

300

200

100

0

-100

-200

Portfolio investment

20

21
20

20

19

17

16

18

20

20

20

20

15

13

12

14

20

20

20

20

11

10

09

08

Foreign direct investment

20

20

20

20

06

07
20

20

20

05

-300

Other investment

APPs in developed economies were among the major triggers of a borrowing binge in a number ofdeveloping economies. Public and publicly guaranteed debt in low and lower-middle-income countries
owed to private creditors rose by 264 per cent during 2010-2019. In comparison, the public external
debt of these countries declined by 7 per cent from 1998 to 2007.40 The search for higher yields has
encouraged private creditors from developed countries to find new debtors in the developing world. In
the wake of the global financial crisis, governments and public sector entities in developing countries
joined the bandwagon of borrowing from the international capital market, hoping to take advantage ofultralow interest rates.
Sovereign bonds – debt owed to private creditors – now account for 40 per cent of all public andpublicly guaranteed debt in low and lower-middle-income countries, up from 23 per cent in 2010. The
expectation of lower borrowing costs, however, has often remained elusive for developing countries
that have borrowed from the international capital market. As private creditors search for higher yields,
the cost of borrowing for developing countries has remained high despite very low interest rates. The
coupon rate on developing country sovereign bonds issued during the post-crisis period averaged
more than 7 per cent, indicating that these countries continued to pay a very high risk premium.

40

The decline in total external debt during this period is in part due to debt relief provided under the Heavily Indebted
Poor Countries Initiative.

Sources: UN DESA, based on IMF
International Financial Statistics(accessed on 22 November 2021).
Note: Values above zero arecapital inflows and values below
zero are capital outflows.

APPs have supported
a borrowing binge indeveloping countries

78

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Excessive external borrowing, especially from private creditors, along with high borrowing costs haveclearly exacerbated debt sustainability concerns for many developing countries. The pandemic further
aggravated the situation, with APPs in the developed economies doing little to reduce borrowing costs
for developing countries. The latter have faced fewer constraints in borrowing from the international
capital market but that has not necessarily reduced their borrowing rates. In March 2021, Ghana, forexample, raised $3 billion with Eurobonds as the country continued to grapple with the pandemic,
agreeing to pay 7.75-8.875 per cent interest on the debt. Kenya, facing a high risk of debt distress,
raised $1 billion with a Eurobond issue in June 2021, with a coupon rate of 6.3 per cent. These highborrowing costs will significantly increase debt-servicing costs and may undermine debt sustainability.

The size of spillover
effects depends on
economic fundamentals

Developing countries with a more open capital account and greater financial linkages with the UnitedStates and euro area economies are more susceptible to APPs pursued by the Federal Reserve and ECB(Apostolou and Beirne, 2017). Countries’ economic fundamentals also affect the scale and durationof APP impacts. Developing countries with economic and financial imbalances, especially those withhigh levels of external debt denominated in foreign currencies prior to the crisis, are facing significant
debt distress and default risks.

The bumpy road ahead: looking beyond asset
purchase programmes
Unwinding APPs will
support future efficacy ofthis policy tool

Large-scale asset purchases are an effective policy tool to ease financial stress and propel economic
recovery following a crisis. But they cannot be a magic wand for boosting investment, employment
and economic growth in the long term. Over time, the costs of sustained APPs are likely to outweightheir benefits, as the programmes exacerbate macroeconomic and financial risks, while adversely
impacting wealth distribution and debt sustainability. To maintain their efficacy as a monetary policy
tool, central banks need to unwind APPs when financial and economic stability objectives are realized.

Challenges in unwinding unconventional monetary policies
As the world economy recovers from the pandemic, higher consumer price inflation and record inflationin asset prices are pressuring major developed country central banks to scale back, if not unwind, their
APPs. This time, tapering asset purchases could happen at a much faster pace than after the global
financial crisis.41 The Federal Reserve has already begun to slow monthly asset purchases. The Bankof England has also started reducing the scope of its APP. While tapering is underway, it is unlikely thatmajor central banks will completely exit APPs any time soon. The assets on their balance sheets will
likely remain as it will be too costly to push these back to the financial markets.

41

This would follow the breakneck pace of asset purchases undertaken at the outset of the pandemic.

THE MONETARY POLICY RESPONSE TO COVID-19

79

Unwinding and eventually exiting APPs will not be easy. The developed country central banks, especiallyCentral banks facedifficult trade-offs inunwinding policy support

CHAPTER II

the Federal Reserve and the ECB, face the challenge of scaling back bond purchase programmes
without creating financial market turmoil and destabilizing global financial flows. The risk of policy
mistakes, either by withdrawing stimulus too fast or by waiting too long with tightening, is substantial.
Beyond this immediate challenge, the more fundamental question is if – and if so, how quickly –central banks will reverse asset purchases and reduce the size of their balance sheets.42
Reducing and eventually stopping new purchases and gradually selling off assets involves risks formonetary and fiscal authorities as well as financial markets. When central banks taper asset purchases
and eventually shrink their balance sheets, markets could face upward pressure on the yield curve.
Rising interest rates could pose a financial risk for central banks’ massive balance sheets as these

Rising interest rates
could create a maturity
mismatch on balance
sheetswill increase debt-servicing risks and the roll-over risks of debt (especially public debt). Central banks
will need to manage risks from the maturity mismatch of assets and liabilities on their balance sheets.
As interest rates rise, the costs of central bank liabilities (in the form of commercial bank reserves
bearing floating interest rates) may increase quickly, whereas the interest income from central bankassets (in the form of long-term bonds) could grow more slowly (Allen, Chadha and Turner, 2021). At
the same time, central banks face the risk that reducing large holdings of long-term government bonds
will disrupt bond markets.
For fiscal authorities, debt service costs in several developed countries have become more sensitive
to short-term interest rates, in part due to APPs. If interest rates were to rise more sharply and rapidly
than expected, public finances could come under pressure, especially in countries with high debt
burdens, such as Canada, Italy, the United Kingdom and the United States. In the United States, interest
expenses accounted for about 10 per cent of total government revenues in 2020. This ratio is forecast
to increase to about 14 per cent by 2030 in the baseline scenario but may soar to 22 per cent in 2030
under a higher interest rate scenario, which could force the United States Government to cut back onessential spending.43 The United Kingdom’s Office for Budget Responsibility (OBR, 2021) estimatesthat if short- and long-term interest rates were both 1 percentage point higher than in the baseline
scenario, interest expenditure on debt would increase by 0.8 per cent of GDP in 2025-2026. This “would
make the task of keeping debt on a sustainable path more difficult”.
The fiscal implications of a sudden unwinding of APPs could be equally consequential for developing
countries, especially those with open capital accounts and high levels of external public debt. Higher
interest rates, following the end of APPs, will likely trigger capital outflows and further aggravate debt
sustainability for many developing countries with high levels of hard currency-denominated external
debt.

42
43

Tapering slows the pace of asset purchases and leads to an outright reduction of the balance sheet. Afterpurchases have ended, central banks are expected to gradually reduce the size of their balance sheets by letting
maturing securities roll off (Milstein, Powell and Wessel, 2021).
Under the higher interest rate scenario, the interest on 10-year Treasury notes would rise to about 4 per cent in2025.

Debt service costs are
sensitive to interest rateincreases80WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Abrupt unwindingof APPs could delay
economic recovery

An abrupt unwinding of APPs, in essence, would have the same adverse effect as premature austerity
in both developed and developing countries. It would likely lead to cuts in fiscal spending that would
not only delay recovery but could also push many economies into recession. It will remain critical forthe major central banks to calibrate and coordinate their decisions to taper APPs and reduce theirbalance sheets, keeping in mind that there will be significant macroeconomic externalities not onlyin their own economies but also in economies in the rest of the world. Externalities from a sudden
unwinding of APPs will be large especially for countries exposed to the international capital market.
The “taper tantrum” of May 2013 serves as a reminder of these risks. At that time, equity and government
bond prices dropped immediately. The sell-off of Treasury bonds spilled into corporate bond markets
and in less than two months drove a 5 per cent decline in the price of the S&P 500 Investment Grade
Corporate Bond Index. The abrupt tightening of financial conditions created major negative spillovers
for many developing countries. The sudden stop and reversal of capital flows affected exchange rates
and asset prices, resulting in a deterioration of broader balance of payment and economic conditions.

The need for complementary policies
When central banks taper asset purchases and eventually exit from unconventional policies, they willneed to ensure that they manage market expectations and minimize both short- and long-term risks.
One important lesson from the 2013 “taper tantrum” is that careful communication about balance
sheet policies is imperative to avoid market overreaction.

Macroprudential policies
can help mitigate theadverse impacts of APPs

Macroprudential policies can play an important role in strengthening the resilience of the financial
system, thus helping to limit the adverse effects of APPs and facilitating the unwinding process.
Macroprudential measures can slow asset price growth and restrain excessive risk-taking, especiallyin sectors that pose greater risks to the financial system. For instance, to tackle rising property prices,a few countries (such as Canada, the Netherlands and New Zealand) have tightened loan-to-value
limits and applied higher floors on interest rates for banks to evaluate mortgage affordability (BIS,
2021a). Some form of lender-targeted measures can reduce the sensitivity of domestic credit cycles
to cross-border capital flows. In the aftermath of the global financial crisis, for example, the Republicof Korea applied a withholding tax on foreign purchases of Treasury and Monetary Stabilization Bonds
and imposed a levy on banks’ non-deposit foreign exchange liabilities (Ryoo, Kwon and Lee, 2013).

Central banks shouldgreen APPs to foster lowcarbon activities

APPs offer central banks an opportunity to contribute to mitigating climate risks (Martinez-Diaz andChristianson, 2020). When unwinding their asset purchases, central banks may choose to hold on toassets of sectors and firms with lower carbon footprints. In the process, they would reward climate
action and sustainable investments, such as those related to energy efficiency or renewable energy,
by private sector firms. At the same time, they could develop new principles and guidelines to acquire
low-carbon assets for future APPs.

THE MONETARY POLICY RESPONSE TO COVID-19

81

Reforms of fiscal and taxation policies are needed to address the adverse distributional effects of

Fiscal policies areneeded to address risinginequalities

CHAPTER II

APPs. On the revenue side, more progressive income taxation, combined with targeted measures toreduce wealth disparities, can help to reduce inequalities. A levy on capital gains, for example, could
partly offset rising wealth inequalities that result from the rapid growth of asset prices. Similarly, taxing
corporate stock buy-backs may improve both macroeconomic and distributional outcomes.44 On the
expenditure side, social programmes and targeted government transfers, such as unemployment
benefits, along with increased access to and improved quality of education and health care can protect
the most vulnerable during crises and enhance their resilience to future shocks.
APPs have allowed central banks to inject liquidity and ease financial stress in times of crisis, especiallywhen policy rates reached their effective lower bound. While the programmes have expanded themonetary policy toolkit, they are no silver bullet. Continuation of APPs cannot replace structural
policies to boost investment in the real economy or sustain long-term economic growth. Integrated
policy frameworks, including macroprudential and fiscal policy measures, are needed to help countries
address APP-related inequalities and climate risks, ensuring fair and sustainable recovery.

44

In the United States, a new legislative proposal includes a 1 per cent excise tax on the amount a publicly tradedfirm spends on buying back its own stock.

Developed economies

82

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

GDP growth
Percentage
6
4

4.8
2.3

2
0

1.9

2.5

4.6

1.8

Total
Per capita

3.7
3.5
2.3

1.5

-2

-4.8
-4

-5.0

-6
2018

2019

2020

2021 e2022 f

2023 f

COVID-19 cases & deaths

Vaccination

Per 100,000 people

Percentage of population

as of 20 December 2021

69

World

180

Developed economies

159

Economies in transition

46

Developing economies

3,520
11,282
6,523
2,101

47.5

57.5
68.1

36.7

74.2

45.6
44.7

55.3

684 17

Africa*708 14

East Asia

36

South Asia

62

Western Asia

8.6

13.2
68.8

76.0

irf

a

an

ita

l

ai

sa

ts

ae

ai

sa

nr

et
s

ew

as of 20 December 2021

37.6

56.4

ai

sa

ht

uo

s

ac

2,342
6,666

239

7,253
Cases

DeathsLatin America and the Caribbean**

13.2

42.8

48.2
57.9

Partially vaccinated (at least one dose)

70.5
Fully vaccinatedNote: The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations. The map
represents countries and/or territories or parts thereof for which data is available and/or analysed in World Economic Situation and Prospects 2022. The shaded
areas therefore do not necessarily overlap entirely with the delimitation of their frontiers or boundaries. Aggregate data for Africa, excluding Libya.
* Excluding Libya; **Excluding Bolivarian Republic of Venezuela. e: 2021 estimates. f: 2022-2023 forecasts.
Source for COVID-19 data: UN DESA calculations, based on data from Johns Hopkins University.

CHAPTER III

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

83

Regional developments and outlooks
Developed economies•

Economic sentiment has improved as vaccination progresses in major developed economies.

•

Employment challenges continue with certain sectors experiencing acute labour shortages.

•

Inflationary pressures persist amid prolonged supply-chain disruptions; this may further intensify
inflationary expectations in some developed countries.

United States: a robust recovery facing supply-side
constraints
The economy in the United States grew by an estimated 5.5 per cent in 2021 after a contraction of 3.4
per cent in 2020. A rapid vaccine roll-out and the relaxation of pandemic control measures substantially
improved overall economic sentiment and resulted in a quick recovery of output. The current recovery
is imbalanced, however, with consumption of goods driving GDP growth (figure III.1).

Figure III.1

The contribution of demand components to GDP growth in the United States
Percentage points
6

4

2

0

-2

-4

2019

2020

2021 e2022 fGoods consumption

Private investment

Government expenditureServices consumption

Net exports

GDP

Sources: United States, Bureau of
Economic Analysis, Departmentof Commerce, and UN DESA
estimates and forecasts.
Note: e = estimates,
f = forecasts.

84WORLD ECONOMIC SITUATION AND PROSPECTS 2022

An imbalanced recovery
is overly dependent on
goods consumption

A recovery in services consumption accelerated towards the end of 2021 while recovery in investment
expenditure was robust. Expenditure on equipment and intellectual property products such as softwareand research and development registered a rapid climb. In contrast, expenditure on non-residential
structures remained extremely weak. The contribution of external demand to economic recovery wasanaemic. Growth in gross exports of goods and services is projected to be only slightly positive in
2021; a jump in demand for imports resulted in a significant drag on net exports.

The economy faces
increasing supply-side
constraints

The economy in the United States has faced increasing supply-side constraints that initially emerged
from global supply-chain disruptions triggered by the pandemic. Rapid domestic demand recovery
exacerbated logistics backlogs in incoming freight and domestic transport networks. A shortageof industrial parts, mostly notably semiconductors, has worsened due to continuing supply-chain
bottlenecks, production disruptions in East Asian countries and the quick drawdown of inventories.
Parts shortages have hit the automotive industry particularly hard.

Figure III.2

Labour market indicators in the United States
Percentage

Percentage
64

16
14

63

12
62
10
61

8
6

60

4
59
2
0

Source: United States, Bureau ofLabor Statistics.

2019

2020

2021

58

Unemployment rate (left-hand scale)
Job openings rate (total, non-farm, left-hand scale)Labour market participation rate (right-hand scale)

Another element of supply-side constraints has been a growing labour shortage. The pace of growthin job openings has consistently been higher than the rate of decline in the unemployment rate; theCHAPTER III

85

REGIONAL DEVELOPMENTS AND OUTLOOKS

labour market participation rate has remained lower than the pre-pandemic level (figure III.2). The total
non-farm job openings rate hit a historic high of 7 per cent in July and is forecast to remain high. The
unemployment rate came down to 4.6 per cent in October, still above the pre-pandemic rate of 3.5
per cent in February 2020. While firms have accelerated hiring, the number of workers who quit theirjobs reached a historic high in September 2021. The labour market situation suggests a substantial
mismatch between job seekers and firms looking to hire in terms of skills, wages, locations and otherworking conditions (Lubik, 2021).
Along with rising energy prices, domestic supply-side constraints have pushed up prices. The producer
price index for final demand increased 8.6 per cent in October 2021 from a year earlier, reflecting

Inflationary pressures
have been mounting

higher energy prices and the costs of transportation and warehousing. Nominal wages, in terms of
average hourly earnings, registered a 4.8 per cent annual increase in October 2021, well above thepre-pandemic average of 2.4 per cent over the last decade. Although the nominal wage increase is still
barely over the core inflation rate of 4.6 per cent in the same month, the wage adjustment to inflation
has been noticeably quick. Consumer price inflation is estimated to be 4.3 per cent in 2021.
Highly accommodative fiscal and monetary policies supported quick recovery as stimulus measures
wound down during the second half of 2021. With the expiration of enhanced unemployment benefits

Policies remain
expansionary

in September, the focus of fiscal measures shifted to investment promotion under the Build Back Better
Framework.1 The $1 trillion Infrastructure Investment and Jobs Act was passed by the legislature in
November 2021, while the Build Back Better Act, intended to pump $1.7 trillion into the social safety
net and climate action, is under legislative review. On the monetary side, the Federal Reserve began totaper its asset purchase programme in November.2 Policy debate continues regarding the timing of thefirst policy interest rates hike given inflation prospects.
The United States economy is forecast to grow by 3.5 per cent in 2022 amid a rebalancing of demand(figure III.1). Consumption growth is expected to slow; exports are predicted to recover. The consumer
inflation rate is forecast at 3.2 per cent with substantial supply-side constraints in the first half of theyear. The main downside risks stem from uncertainties regarding the pandemic, inflation prospects
and associated monetary policy decisions.

Japan: slow recovery in domestic demand while supply-chain
disruptions hit exports
The Japanese economy grew an estimated 2.2 per cent in 2021 after a contraction of 4.6 per cent in2020. COVID-19 outbreaks and measures to control the pandemic weakened household and economic
sentiment, which slowed the recovery of domestic demand during the first three quarters of 2021.
Unlike other developed economies, which have witnessed a rapid recovery in residential investment

1
2

See Zandi and Yanos (2021) for detailed discussions on the macroeconomic impact of the Build Back Better
Framework.
See Chapter 2 for details on the asset purchase programmes of central banks during the pandemic.

Growth with a rebalanced
demand structure is
forecast in 2022

86WORLD ECONOMIC SITUATION AND PROSPECTS 2022

since mid-2020, residential investment in Japan continued its downward trend since peaking in thethird quarter of 2019. In the fourth quarter in 2021, however, a decline in COVID-19 cases and progresson vaccination substantially improved economic sentiment.

Supply-chain disruptions
hit the automotive sector

Export growth, the main factor contributing to recovery since the second half of 2020, has lost its
momentum. Supply-chain disruptions, particularly semiconductor shortages, compelled the automotive
sector to operate under full capacity. Exports of automotive products sharply declined in the second
half of 2021. Supply-chain disruptions added inflationary pressure on the prices of goods but thisbarely offset a persistent deflationary trend, particularly in service prices (figure III.3). Consumer priceinflation was an estimated 0 per cent for 2021.

Figure III.3

Inflation trends in Japan
Percentage
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
Source: Japan, Ministry of Internal
Affairs and Communications.

Expansionary policies
contained rising
unemployment andbankruptcies

2019
All

Goods

2020

2021

Services

The Government of Japan implemented sizeable fiscal stimulus measures to minimize the impactof the pandemic. The additional stimulus package for the 2021-2022 fiscal year was 40 trillion yen,
about 7.5 per cent of GDP. Another package for the 2022-2023 fiscal year amounts to 55.7 trillion yen.
Monetary policy continues to be highly expansionary. The Bank of Japan has accelerated its asset

CHAPTER III

87

REGIONAL DEVELOPMENTS AND OUTLOOKS

purchases along with its existing policy framework for quantitative and qualitative monetary easing
with yield curve control. These measures have succeeded in containing rising unemployment andbankruptcies. The unemployment rate peaked at 3 per cent in May 2021 and started declining towards
the pre-pandemic rate of 2.4 per cent. Bankruptcy cases have fallen since a peak in July 2020. Policy
measures did not induce robust private spending growth in 2021, however.
GDP growth is forecast at 3.3 per cent in 2022. Robust domestic demand growth is expected due toincreased private consumption reflecting pent-up demand for goods and services. Private investment
is also projected to recover along with improving economic sentiment. Both monetary and fiscal
policies will likely remain expansionary to support domestic demand recovery. Downside risks stem

Robust domestic demand
growth is expected in
2022 but downside risks
remainfrom uncertainties surrounding the pandemic and supply-chain disruptions. Although the latter haveextensively impacted the automotive sector, it is uncertain if they will escalate to broader supply-side
constraints.

Australia: strong recovery continues despite a temporary
contraction due to Delta variant outbreaks
The Australian economy grew an estimated 3.1 per cent in 2021 after a 2.5 per cent contraction in
2020. A strong recovery in domestic demand promptly led to rapid job recovery in the first half of2021. The unemployment rate declined to 4.9 per cent in June, below the pre-pandemic level of 5 percent. During the third quarter, the recovery faced a setback due to outbreaks of the Delta variant of

A strong recovery
has resulted in
rapid restoration of
employment

COVID-19, however. The economy shrank on a quarterly basis following stringent lockdown measuresin major cities. By the fourth quarter, relaxation of these measures and rapid progress in vaccination
restarted economic activities and recovery. Export recovery has gained steam with rising commodity
prices.
For 2022, the economy is forecast to grow by 4.2 per cent, with robust domestic demand growth.
Export growth is projected to accelerate further with a recovery in services trade. Both monetary andfiscal policies are expected to remain expansionary. The Reserve Bank of Australia will probably scale

Robust domestic demandis forecast to continue in2022

down its bond-buying programme but is not likely to hike its policy rates in 2022 unless rapid wage
growth appears. Downside risks stem from uncertainties over the COVID-19 pandemic and global
supply-chain disruptions. Compared to other developed countries, however, the impact of the latteris likely to be milder given Australia’s service-based domestic demand and commodity-based exports.

Europe: a return to growth but the crisis is not over yet
The economies of Europe returned to growth in 2021, with the gradual easing of COVID-19 containment
measures, continued accommodative macroeconomic policies and a sharp rebound in leading export
destinations. Most European economies registered a double-digit year-on-year increase in output inthe second quarter; the overall performance of the region in the first half of the year exceeded earlier
expectations. Following more than a year of suppression, consumer sentiment improved and private

A strong rebound in thefirst half of the year,
powerful headwinds inthe second

88WORLD ECONOMIC SITUATION AND PROSPECTS 2022

consumption surged as households started to spend savings accumulated due to pandemic-related
precautions or limited scope to spend. Amid the reopening of the services sector and lifting of intraEuropean Union mobility restrictions, economies in countries relatively dependent on tourism, such as
Greece, Italy and Spain, saw a sharp increase in tourist arrivals.
In the second half of 2021, however, the region faced serious headwinds. The manufacturing sector,
which had recovered to its pre-pandemic level of activity, was severely impacted by supply-chain
disruptions in part caused by shortages of shipping containers and lower capacity in Asian ports.
Certain industries, in particular the automotive industry – which is of crucial importance for many
economies in Europe, including the largest, Germany – have been forced to scale back production
because of the global semiconductor shortage. Further, many industries and services have confronted
a large-scale lack of workers, especially truck drivers. Supply disruptions and rising costs of input
materials brought the construction sector in Europe to a standstill in late 2021. Soaring energy prices,
especially for natural gas and LNG,3 caused a spike in electricity costs and became another hurdle toeconomic recovery, disrupting output in energy-intensive firms. The Economic Sentiment Indicator forboth the euro area and the European Union stabilized at a high level in July after rapidly improving since
January 2021 (figure III.4).
The German economy has not regained its pre-crisis size and is expected to expand by only 2.5 per centin 2021. Growth sharply slowed in the third quarter due to sluggish industrial activity and interruptionsin automotive sector output. Disruptions in the supply of intermediate goods were accompanied byrising electricity prices, and in September, producer prices increased by over 14 per cent year on year.
Growth should accelerate to 4 per cent in 2022 given an improved outlook for exports and domestic
investment, the insourcing of the production of semiconductors and other key inputs, and the gradualshift towards European production chains. An expected increase in the minimum wage should support
private consumption. The economy, however, faces medium-term risks associated with slow progressin shifting towards the production of electric vehicles as well as demographic pressures.
Most European countries have accomplished relatively high vaccination rates against COVID-19. Yet,another surge in cases began in the fall of 2021, making the region an epicentre of the pandemic
once again. This led to the reintroduction of containment measures in Austria, Denmark, Latvia,
the Netherlands and Slovakia. These measures may again disrupt service sectors such as leisure,hospitality and travel. A return to the prolonged full-scale lockdown adopted in 2020 remains unlikely,
however.

3

The natural gas price increase in Europe in the second half of 2021 was caused by insufficient domestic storage,
declining imports from the Russian Federation, a sharp increase in LNG demand from Asia and the shift from longterm gas purchase contracts to spot markets.

CHAPTER III

89

REGIONAL DEVELOPMENTS AND OUTLOOKS

Figure III.4

Economic sentiment indicator for the European Union and the euro area
Index, Long-term average = 100
130

120

110

100

90

80

70

EU

21
tOc

21
lJu

21
rAp

21
n-

Oc

Ja

20
t-

20
lJu

20
rAp

Ja

n-

20

60

Euro area

Source: European Commission,
2021.

The consequences of Brexit weighed on production activities in the United Kingdom, despite the Tradeand Cooperation Agreement reached with the European Union in 2020. Numerous non-tariff barriers
emerged in trade between the two, while significant uncertainty remains around trade in services. Aftera double-digit year-on-year expansion in the second quarter of 2021, economic growth in the United
Kingdom noticeably slowed amid supply-side and fuel shortages. Difficulties in bringing in migrant
workers to meet labour demand, a problem that to a certain extent resulted from Brexit,4 contributed
to persistent supply-side bottlenecks.
The outlook for European economies for 2022 is mixed, as the weaknesses of late 2021 will carryon to at least the first quarter. Headline growth may taper somewhat due to the weaker base effectand the start of the gradual unwinding of anti-crisis stimulus measures. On the positive side, theEuropean Union will begin benefiting from the largest stimulus package implemented in decades – thecombination of the European Community’s long-term multi-annual budget running from 2021 to 2027
and the massive Recovery and Resilience Facility, the NextGenerationEU. The latter, worth over 800

4

Although over 6 million foreign workers applied for residency in the United Kingdom after Brexit, many have left
the country. In 2020, the net migration of European Union nationals to the United Kingdom was negative. See ONS,
2021.

A massive recovery plan
to improve long-term
growth prospects

90WORLD ECONOMIC SITUATION AND PROSPECTS 2022

billion euros, is financed by joint debt issuance. Implementation of the recovery plan, with spending
focused on sectors with high growth multipliers, should facilitate the modernization and digitizationof infrastructure, bolster research and innovation, expedite the shift towards a sustainable economy,address social problems such as youth unemployment and improve the efficiency of governance.
Actual impacts will of course depend on the ability of national governments to use allocated funds.
The aggregate GDP of the EU-27, after shrinking by 6 per cent in 2020, bounced back by an expected
4.7 per cent in 2021. It may be followed by a further 3.9 per cent expansion in 2022, assuming that
prolonged lockdowns are not resumed. European Union member States from Eastern Europe areprojected to maintain a positive growth differential with their West European peers. Among European
countries not in the European Union, the economy of the United Kingdom expanded by an estimated
6.2 per cent in 2021 and is expected to see further growth of 4.5 per cent in 2022. Despite difficulties inlate 2021, the outlook for the economy in the United Kingdom is positive. Most of the corporate sector
is in a strong financial position, and a two-year tax deduction incentive should encourage investment.

From battling deflation
to dealing with inflation
worries

Consumer price inflation turned negative in many European countries in 2020. It remained subdued inearly 2021 but accelerated markedly in the second half of the year (see Figure III.5). Even in countries
with a long record of price stability, annual inflation exceeded 4 per cent in the final quarter of theyear, much above the European Central Bank’s (ECB) 2 per cent target. Apart from the base year
effect, including from a temporary reduction in the value added tax in Germany, the surge in inflation
is explained by various factors. These include higher producer prices caused by skyrocketing costsof raw materials and energy, a sharp rise in food prices and persistent supply-chain disruptions. In
Eastern European countries with flexible currencies, depreciation added to inflationary pressure.
To mitigate the impact of higher gas and electricity prices on households and businesses, several
European countries, including France, Italy and Spain, adopted various measures to curb them. In July
2021, the ECB announced that it will tolerate overshooting the inflation target. Most inflationary factors
are believed to be transitory; however, a longer-than-anticipated period of above-target inflation may
lead to a second-round effect on labour markets and a wage-price spiral.

Employment isrecovering; many
countries are facing
worker shortages

Labour market conditions notably improved in 2021, with a robust increase in working hours in mostcountries. In the Czech Republic and Germany, unemployment fell to low single-digit levels, while
it remains elevated in Greece and Spain. Phasing out furlough schemes implemented in several
countries since the beginning of the pandemic may lead to a modest rise in unemployment, but ingeneral, the European economy should add jobs over the next couple of years. Labour demand is
expected to strengthen. Several European countries confront labour shortages causing significant
logistical bottlenecks and reflecting persistent mismatches between labour supply and demand anddifferent speeds of recovery across sectors (see Chapter 1). Although immigration remains a politicallycontentious issue, a long-term, comprehensive immigration strategy for bringing in skilled workers
may mitigate labour supply pressures. Removing obstacles to internal mobility that emerged from thepandemic may also address labour shortfalls in some countries. Given that virtually all European Union
countries are facing demographic shifts, however, alleviating labour shortages in one country via intraEuropean Union migration would most likely exacerbate shortages in others.

CHAPTER III

91

REGIONAL DEVELOPMENTS AND OUTLOOKS

Figure III.5

Annual change in the Harmonized Index of Consumer Prices for select European
countries
Percentage
10

8

6

4

2

n
ai
Sp

ia
en
ov
Sl

nd
la
Po

th

ua

ni

a

ia
Li

tv
La

nd
la
Ire

Ge

rm

an

y

ce
an

to
Es

January 2021

Fr

ni

m
iu
lg
Be

Eu

ro

ar

ea

-2

a

0

November 2021

Macroeconomic policies in Europe largely maintained their accommodative stance in 2021, with
continuing liquidity and wage support schemes. As an outcome of massive stimulus spending, public
debt levels soared in some countries, far exceeding limits set by the Stability and Growth Pact (see figure
III.6). Ceilings on the size of budget deficits and public debt were earlier put on hold by the European
Commission when it activated the pact’s escape clause. Most European countries will neverthelessstart putting their public finances in order beginning in 2022. The pace of fiscal consolidation will likely
be gradual and decided at a national level. Stronger growth rates will have a modestly positive effecton debt ratios while financing costs should remain low. For the United Kingdom, exiting the European
Union allowed greater fiscal flexibility, and the proposed budgetary framework up to 2025 remains
accommodative. The ability to borrow in British pounds and the accommodative stance of the Bank ofEngland are expected to provide sufficient fiscal space to support growth.

Source: Eurostat.

A gradual shift to fiscal
consolidation

92

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure III.6

Gross public debt-to-GDP ratio for select European countries
Percentage
250

200

150

100

SGP
limit

50

The ECB’s asset
purchases are to bescaled down; Eastern
Europe tightens policy

n
ai
Sp

al
Po

rt

ug

ly
Ita

ce
ee

rm
Ge

Gr

an

y

ce
an
Fr

a
Es

to

ni

s
es
pr
Cy

m
iu
lg

st

2019

Be

Source: Eurostat.
Note: SGP refers to the Stability
and Growth Pact.

Au

EU

-2

ria

7

0

2020

Following the enactment of massive anti-crisis liquidity support schemes, central banks in Europe are
expected to start gradual monetary policy normalization. The key policy rates of the ECB, the interest
rate on the main refinancing operations and the deposit rate, are likely to be maintained at 0 per centand minus 0.5 per cent, respectively, at least until early 2023. By contrast, the main policy tool of the
ECB since 2020,5 asset purchases, is expected to be scaled down starting in 2022.6 The reduction inmonthly asset purchases will take place gradually to avoid raising long-term interest rates and prevent
disruptions in financial markets. The ECB’s balance sheet will likely retain its size in the medium term,with reinvestment of payments from maturing securities.
Outside the euro area, in Sweden, the Riksbank completed its asset purchases by December 2021.
In Denmark, where the Government entered the crisis with a large liquidity buffer, the Central Bank,
after a series of currency interventions, has reduced the already negative key interest rate further
to curb appreciation pressures, defending the peg to the euro. In Eastern Europe, inflation rates notseen for over a decade and concerns about rising inflationary expectations prompted sharp interest
rate hikes in the Czech Republic, Hungary, Poland and Romania. In European countries outside the56

The ECB is running two asset purchase programmes: the Pandemic Emergency Purchase Programme to bephased out in March 2022 and the smaller Asset Purchase Programme.
The volume of newly issued sovereign bonds is also expected to shrink along with planned reductions in budget
deficits.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKSEuropean Union, the Bank of England has announced that it plans to begin slowing its asset purchases
once interest rates reach 0.5 per cent. Continued favourable monetary conditions in Europe will givea respite to the corporate sector, given elevated business indebtedness. On the other hand, monetary
authorities should acknowledge the risks from credit misallocation and elevated asset prices, which
could produce unanticipated and sharp price corrections.

93Economies in transition

94

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

GDP growth
Percentage
6
4
2

4.4
3.2

2.7

2.9

3.2

2.9

4.1
3.0

2.3

Total
Per capita

2.7

0

-2.6

-2

-2.9

-4
-6
2018

2019

2020

2021 e2022 f

2023 f

COVID-19 cases & deaths

Vaccination

Per 100,000 people

Percentage of population

as of 20 December 2021

69

World

180

Developed economies

159

Economies in transition

46

Developing economies

3,520
11,282
6,523
2,101

47.5

57.5
68.1

36.7

74.2

45.6
44.7

55.3

684 17

Africa*708 14

East Asia

36

South Asia

62

Western Asia

8.6

13.2
68.8

76.0

irf

a

an

ita

l

ai

sa

ts

ae

ai

sa

nr

et
s

ew

as of 20 December 2021

37.6

56.4

ai

sa

ht

uo

s

ac

2,342
6,666

239

7,253
Cases

DeathsLatin America and the Caribbean**

13.2

42.8

48.2
57.9

Partially vaccinated (at least one dose)

70.5
Fully vaccinatedNote: The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations. The map
represents countries and/or territories or parts thereof for which data is available and/or analysed in World Economic Situation and Prospects 2022. The shaded
areas therefore do not necessarily overlap entirely with the delimitation of their frontiers or boundaries. Aggregate data for Africa, excluding Libya.
* Excluding Libya; **Excluding Bolivarian Republic of Venezuela. e: 2021 estimates. f: 2022-2023 forecasts.
Source for COVID-19 data: UN DESA calculations, based on data from Johns Hopkins University.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

95

Economies in transition•

The Commonwealth of Independent States (CIS) and South-Eastern Europe returned to growthamid the lifting of pandemic containment measures, higher commodity prices and an improved
external environment.

•

Surging inflation is hurting living standards, prompting monetary tightening in the CIS.

•

Official development assistance remains important for parts of the region.

The Commonwealth of Independent States and Georgia: thelifting of restrictions and higher commodity prices underpin
an economic reboundEconomic growth in the CIS area, including Georgia, resumed in 2021 following contraction in 2020. The
turnaround picked up as mobility and activity restrictions were eased or removed. A more favourable
external environment, including sharp rises in commodity prices, boosted export volumes and revenues.
Services also bounced back while construction activities benefited from support programmes in the
Russian Federation and higher remittances sent to Central Asian countries. Better terms of trade forenergy-exporting countries improved their current account positions, despite the recovery of imports.
In energy-importing countries, remittance flows and tourism revenues along with rebounding domestic
demand mitigated current account pressures from import growth.
Growth in the CIS area in 2021 was largely driven by consumer demand, amid raising employment
levels, increased retail lending and higher remittances to smaller CIS countries. Investment generally
trailed behind amid high uncertainty and subdued foreign direct investment inflows. The relaxation of
oil output restrictions under the OPEC Declaration of Cooperation,7 along with elevated prices for oiland natural gas in late 2021, accelerated recovery in energy-exporting countries.
In the Russian Federation, the main impetus for growth came from the rebound in household spending,boosted by one-off social payments and wage growth due to tight labour market conditions. Investment
activity also picked up. The Government launched multiple stimulus packages in 2020-2021, including
tax deferrals and guarantees, equivalent to about 6 per cent of 2020 GDP. Despite higher export revenues,
protection of reserve buffers against possible external shocks remains a priority. International reserves
rocketed to historically high levels in 2021, virtually eliminating debt service risks.8 That same year, theUnited States and the European Union introduced additional economic sanctions against the Russian

7
8

The Declaration of Cooperation is a coordination mechanism for crude oil production by both OPEC member
countries and 11 non-OPEC member countries. It is referred to as “the OPEC Plus agreement”. See OPEC (2021)
for details.
In late 2021, international reserves of the Russian Federation exceeded total external debt by around one third.

Private consumption
remains the major driverof growth96WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Federation, in particular forbidding banks based in the United States to purchase Russian sovereign
debt on the primary bond market. The decline in the share of non-residents in the Russian domestic
bond market was rather limited in 2021, however. The Government in any case was able to issue
debt denominated in the local currency and borrow from domestic banks. Economic growth is likely
to moderate from the estimated 4.2 per cent in 2021 to 2.7 per cent in 2022 as the Government
moves towards fiscal consolidation. The ambitious $360 billion National Development Projects Plan,
comprising large investments in infrastructure and the social sphere, was postponed.
In Ukraine, a good harvest, higher steel prices and a surge in construction boosted output in 2021.
Economic potential is constrained by the conflict in the East, however, as well as a challenging
business environment and large-scale emigration. IMF lending will be important for meeting external
debt service obligations in 2022. In Belarus, despite the absence of generalized lockdown measures,
domestic demand remained weak amid political tensions. Exports performed well, supported by higher
prices for refined oil products and fertilizers, despite sanctions imposed on the country in 2021 byseveral parties, including the European Union.
In Central Asia, the rebound in remittances in 2021 spurred private consumption; most countries
registered high growth rates. Poor performance of the gold sector dampened recovery in the Kyrgyz
Republic, however. Pandemic-related restrictions introduced by China in 2020 damaged cross-border
trade with Kazakhstan, Kyrgyzstan and Tajikistan, affecting many small businesses.
Following the rebound in 2021, output growth in the CIS area is expected to decelerate in 2022, given
weaker base effects, the moderation of consumer demand, more restrictive macroeconomic policies
and persistent structural constraints. Without more ambitious reforms, growth will settle aroundmoderate pre-pandemic expansion levels. The aggregate GDP of the CIS and Georgia, after a 2.6 percent contraction in 2020, increased by an estimated 4.3 per cent in 2021 and is forecast to rise by 3.2
per cent in 2022. Integration processes within the framework of the Eurasian Economic Union9 are
expected to continue, including for financial systems.
Vaccination rates in the region remain relatively low, rendering it vulnerable to further waves of

Vaccination against
COVID-19 is progressing
slowlyinfection. In late 2021, the situation in the Russian Federation sharply deteriorated, prompting a oneweek lockdown. COVID-19 cases also spiked in Georgia and Ukraine.
Unemployment in the CIS area declined through 2021, approaching pre-pandemic levels in the best-

Labour markets have
improved

performing countries. They include the Russian Federation, where limited inflows of migrants added
to the tightness of labour markets, and numerous sectors such as construction saw shortages ofworkers. The unemployment rate declined to a record low of 4.3 per cent in September. Authorities
relaxed some restrictions imposed earlier, such as by lifting entry bans on Tajik and Uzbek citizens who
had committed minor violations.

9

Eurasian Economic Union members are Armenia, Belarus, Kazakhstan, Kyrgyzstan and the Russian Federation.
Cuba, Moldova and Uzbekistan are observers.

REGIONAL DEVELOPMENTS AND OUTLOOKS

97

Most of the CIS area experienced a strong upsurge in inflation in 2021, which reached double-digit

An upsurge in inflation iseroding living standards

CHAPTER III

levels in many countries. The upswing resulted from a combination of supply disruptions, higher foodand energy prices, strengthened demand and, in some cases, past exchange rate depreciation. It alsocame from elevated inflationary expectations and accelerated purchases. Governments responded invarious ways. Kazakhstan introduced price controls and export quotas to contain food price pressures.
In the Russian Federation, export duties, price controls and agreements with producers were deployed
to limit price hikes. In most of the region, inflation is expected to moderate in 2022, except for Moldova,
where increases in natural gas tariffs in late 2021 will lead to a double-digit annual consumer priceincrease.
Monetary authorities reacted to the inflationary spike by tightening policies. Interest rate increases
in 2021 were substantial, with a series of successive hikes in virtually all countries (see figure III.7).

Monetary policy issignificantly tightening

Despite tighter monetary policy, retail lending, in particular mortgage lending, grew rapidly, supporting
the recovery of demand. In the Russian Federation, the Central Bank announced plans to curb lending
growth in late 2021; a tight monetary policy is expected to continue in 2022 amid concerns about highinflationary expectations.

Figure III.7

Changes in benchmark monetary policy rates in the CIS and Georgia since January
2021
Basis points
0

100

200

300

400

500

Russian Federation
Republic of Moldova
Kyrgyzstan
UkraineTajikistan
Armenia
Georgia
Belarus
Azerbaijan
Kazakhstan

Sources: National central banks
data as of 20 December 2021.

98WORLD ECONOMIC SITUATION AND PROSPECTS 2022

The crisis leaves a legacyof public debt

Fiscal policies, although less expansionary than in 2020, have continued to support recovery. Public
revenues increased as growth resumed, often exceeding earlier expectations. In the Russian Federation,
the deficit fell sharply in 2021 on the back of growing revenues and the return to fiscal consolidation,
implying a less supportive fiscal impulse. A tighter fiscal stance is anticipated in 2022, when the fiscal
rule is expected to be reinstated. Although public debt in the Russian Federation remains low, at around20 per cent of GDP, for many other CIS economies, especially energy importers, the crisis has left higher
public indebtedness. In Kyrgyzstan, for example, the public debt-to-GDP ratio increased from 54.1 percent of GDP in 2019 to 68.1 per cent in 2020. The composition of the debt, with a significant share of
official financing, represents a mitigating risk factor in the most vulnerable countries. Official financing,
critical at the height of the crisis in 2020, remains important, as the recovery of private flows has been
limited. Countries from the region have retained good access to international capital markets, however,with a spate of well-received Eurobond issues. The new allocation of the IMF’s Special Drawing Rights
has alleviated financing needs for many countries, including Ukraine, and helped rebuild reserves.
Looking forward, the region faces multiple downside risks. Volatile commodity prices, especiallyof oil and natural gas, will remain a major determinant of economic performance. Slow progress invaccination may lead to a rise in new COVID-19 cases. Mounting geopolitical tensions, internal political
strife and the potential for refugee flows from Afghanistan into Central Asia could heighten instability,
undermining business and consumer confidence. The banking sector has fared relatively well during
the COVID-19 crisis but may come under stress in some countries as temporary forbearance measures
are withdrawn and the share of non-performing loans rises, particularly in Ukraine. Persistent pricepressures may unleash expectations of rising inflation, leading to quicker policy tightening anddomestic tensions.

Box III.1

Sustainable finance in the Commonwealth of Independent States and Georgia
New financial products worldwide are supporting the shift towards sustainable development. This
wave of innovation has been accompanied by reflection on the role of financial regulators in bothactively contributing to climate change mitigation and adaptation and addressing related risks to thefinancial system. Sustainable finance is highly relevant for CIS countries, given the importance ofhydrocarbons for their economies, including for non-energy-exporting economies through remittances,
trade and investment channels, and the related costs of the green energy transition.
Green bonds, where proceeds are used for environmental goals, account for most new offerings. Aftera slow start compared with other emerging markets, the pace of issuance has picked up. Several
financial institutions in Armenia and Kazakhstan and non-financial corporations based in Georgia
debuted new products in 2020. Overall issuance in the first nine months of 2021 reached record
levels (figure III.1.a). Corporations have pioneered these new financial products and, in line with otheremerging markets, financial institutions have been major players. In July 2021, Uzbekistan broke new

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

ground with a sovereign Sustainable Development Goals bond, where proceedings will be allocatedto education, water management, health and green transportation, among other ends. The city of
Moscow in the Russian Federation issued the first subnational green bond to finance infrastructure
projects that reduce air pollution from transport.
New sustainable financial instruments have been accompanied by increased product diversification.
For example, some Russian companies in extractive sectors have issued loans linked to sustainability,
where interest paid is linked to meeting specified environmental targets. This approach gives issuers
more flexibility, as the use of proceeds is not tied to particular projects. Perpetual bonds have been
issued by Russian Railways to finance green projects, first in 2020 in the domestic market and thenin 2021 in the Eurobond market. While few projects are fully green, the potential pipeline of investable
initiatives that could reduce environmental footprints is large. So-called transition bonds, which provide
finance for emissions-intensive sectors to meet specific performance criteria, could be of particularinterest to the region.
Given the frequent absence of clear comparators, it is difficult to make strong statements on a“greenium” or cost-of-financing advantage. Recent issues have attracted strong investor interest,
which has translated into high levels of oversubscription. This has lowered prices and opened accessto a broader investor base, which tends to reduce volatility.
From the point of view of issuers, launching a green or sustainable bond has a significance beyond
raising revenues at an expected lower financial cost. It allows them to engage with investors and, in thecase of corporations, consumers, and to signal their efforts to adopt more sustainable practices andbusiness models. Wide acceptance of these bonds requires alignment with well-established criteria
around how proceeds can be used and the existence of suitable monitoring mechanisms, however.
According to common practice, issuers have put in place frameworks that detail revenue use and areverified by external parties, but this is a source of additional costs that may deter issuance.
Different forms of financial support have encouraged the development of green finance. For example,
under certain conditions, the costs of assessing green bond alignment with globally accepted standards
are reimbursed by the Astana International Financial Centre, which aims to become a regional leader ingreen finance. In the Russian Federation, subsidies to cover part of the cost of the coupon are provided
by the national ecology programme. International organizations and multilateral development banks
have played roles as anchor investors (European Bank for Reconstruction and Development), helped
to identify suitable projects to finance (United Nations Development Programme) or even issued green
bonds in domestic markets to raise funding in local currency (Asian Development Bank).
For most countries in the CIS, issuance in external markets is the rule as the investor base for domestic
launches remains limited. This relates to the lack of awareness of green instruments among domestic
investors but also to shallow domestic capital markets. Judging by developments in other countries
and ongoing regulatory initiatives to support demand, green and similar bonds are expected to accountfor an increased share of total issuance in the future. They still add to the debt burden of issuers,

99

100

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

however, and, in most cases, to their foreign currency exposure. These risks need to be understood andmanaged, including through regulatory actions to ensure transparency and promote demand. More
Author: José Palacin, United
Nations Economic Commission
for Europe

general initiatives are required to foster domestic capital markets. While sustainable finance carries
transformative potential, critical constraints could relate to the appropriate pricing of externalities andregulatory reforms in relevant sectors.

Figure III.1.a

Green bond issuance in the CIS and Georgia
Millions of United States dollars
1200

1000

800

600

400

200
Sources: International FinanceCorporation, Amundi, Bloomberg,
Climate Bonds Initiative andEnvironmental Finance.

0

2019
Russian Federation

2020

Q1-Q3 2021

OthersSouth-Eastern Europe: growth returns to the region
Economic growth returned to South-Eastern Europe in 2021 after a COVID-19-induced recession in
2020. An improved external environment was a major driver of recovery in these open economies
with strong links to the European Union through trade and remittances, and, in the case of Albania andMontenegro, large dependence on the tourism sector. In Serbia, the largest economy in the region, theeconomy expanded by more than an estimated 6 per cent in 2021 amid soaring private investment
and exports. Consumer confidence in South-Eastern Europe has markedly improved; macroeconomic
policies have been generally supportive. Investment remained comparatively weak, although in Albania,
post-earthquake reconstruction will continue to contribute to recovery. In late 2021, some countries

CHAPTER III

101

REGIONAL DEVELOPMENTS AND OUTLOOKS

experienced an energy supply crisis induced by the increasing cost of natural gas, leading to more
use of coal along with higher prices for it. The pace of economic expansion may slow somewhat in
2022, as fiscal support unwinds to stabilize debt ratios. Aggregate GDP in South-Eastern Europe, after
contracting by 3.1 per cent in 2020, is projected to increase by 6.2 per cent in 2021 and a further 4 percent in 2022.
After years of moderate price increases, inflation pressures have returned to the region, driven by the
sharp acceleration in food and energy prices and, to a lesser extent, stronger consumer demand. Higher
inflation has offset most nominal wage growth and worsened social conditions, with food accounting

After years of low
inflation, consumer
prices have increased

for up to 30 per cent of consumption spending. Price increases have been steeper in Serbia, while in
Bosnia and Herzegovina and Montenegro, a deflationary trend ended. Formal or informal currency
pegs constrain monetary policy in the region. While labour markets showed some positive trends in
2021, unemployment remains precariously high in Bosnia and Herzegovina and the Republic of North
Macedonia.
Fiscal balances in the region improved as revenues increased and spending growth moderated. The
fiscal impulse remained positive in 2021 but consolidation is likely in 2022. Countries have retained

Fiscal balances in theregion have improved

favourable access to capital markets, despite some deterioration for Montenegro. Several countries
issued Eurobonds, including Serbia, which offered its first sovereign green bond. Current accountdeficits in the region remain high, especially in Albania and Montenegro, and despite a moderate
reduction in the latter. Increases in exports and tourism revenues have been offset by stronger
domestic demand and higher energy prices.
The outlook for the region is subject to certain risks. Vaccination rates are still relatively low, particularly
in Albania and Bosnia and Herzegovina, which could lead to further waves of infection that derail

Structural barriers togrowth remain

recovery. Structural impediments to growth in South-Eastern Europe remain significant; the pandemic
exacerbated already low productivity levels and labour market participation rates. Demographicpressures and outward migration create additional challenges. Geopolitical tensions, while contained,
could resurface. Infrastructure deficits, skills shortages and weak governance continue to undermine
private investment.
In 2021, Albania, North Macedonia and Serbia agreed to lay the foundation for a single market, including
the free movement of labour. This is within the framework of the initial “mini-Schengen” initiative,
later renamed “Open Balkans”, which is aimed at removing internal borders by 2023. To some extent,
the move reflects frustration with slow progress in accession to the European Union, which should
nevertheless continue to provide an anchor for domestic policies and remain a source of financing.

An additional regional
cooperation framework
was launched102

AfricaWORLD ECONOMIC SITUATION AND PROSPECTS 2022

GDP growth
Percentage
6
4

3.2

2.8

3.8

4.0

3.6

1.3

1.5

1.2

Total
Per capita

2
0

0.6

-2.2

0.2

-2
-4

-4.6

-6
2018

2019

2020

2021 e2022 f

2023 f

COVID-19 cases & deaths

Vaccination

Per 100,000 people

Percentage of population

as of 20 December 2021

69

World

180

Developed economies

159

Economies in transition

46

Developing economies

3,520
11,282as of 20 December 2021

6,523

57.5
68.1

36.7

74.2

45.6
44.7

55.3

684 17

Africa*708 14

East Asia

36

South Asia

62

Western Asia

8.6

13.2
68.8

76.0

ita

l

ai

sa

ts

ae

ai

sa

nr

et
s

ew

2,101

47.5

6,666

239

7,253

Latin America and the Caribbean**

37.6
13.2

42.8

56.4
48.2
57.9

70.5

ai

sa

ht

uo

s

ac

irf

a

an

2,342

Cases

DeathsPartially vaccinated (at least one dose)

Fully vaccinatedNote: The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations. The map
represents countries and/or territories or parts thereof for which data is available and/or analysed in World Economic Situation and Prospects 2022. The shaded
areas therefore do not necessarily overlap entirely with the delimitation of their frontiers or boundaries. Aggregate data for Africa, excluding Libya.
* Excluding Libya; **Excluding Bolivarian Republic of Venezuela. e: 2021 estimates. f: 2022-2023 forecasts.
Source for COVID-19 data: UN DESA calculations, based on data from Johns Hopkins University.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS103

Developing economies
Africa: rebound in economic growth amid great downside
risks•

Economic output in Africa is projected to rise, but it is subject to risks from recurrent waves of
COVID-19 and increased instability.

•

A boom in commodity prices is providing much needed fiscal space for commodity exporters but
tourism-dependent countries may take longer to bounce back.

•Multilateral support to the region will remain critical for full recovery, including to expedite vaccine
distribution and facilitate debt relief.

Economic activity in Africa continues recovering from the unprecedented events of 2020 but at a
fragile pace. A projected expansion is marked by high uncertainty and exposure to repeated waves of
COVID-19 infection, as seen recently with the emergence of the Omicron variant. Mitigation measures,

Returning to normal
economic activity has
been challenging in Africa

such as lockdowns and travel bans, have been the main tool for stopping the spread of the virus due
to low vaccination rates. Resulting disruptions in economic activities make a return to pre-pandemic
conditions difficult. Although most African economies are witnessing rising output levels, supported
by a more favourable global context, economic recovery has been weaker than in other regions.
Aggregate output in Africa is projected to recover gradually against a backdrop of subdued investment
and high uncertainty. Economic growth is estimated to firm up in 2022, to 4 per cent from 3.8 per centin 2021 (figure III.8). This should be driven by the gradual rollback of virus containment measuresand rising vaccination rates as well as higher commodity prices and incremental improvements ininvestment rates. Africa observed one of the slowest recoveries in the world in 2021, lagging average
growth rates for the developing countries and the globe, which are estimated at 6.4 per cent and5.5 per cent, respectively. Projections point to a permanent loss of output in the forecast horizon(figure III.9). To return to its pre-pandemic trajectory of output growth, Africa would need to grow byapproximately 6 per cent in 2022-2023, which is as fast as South Asia. In per capita terms, real GDP
levels are expected to remain below pre-pandemic levels through 2023, especially in southern Africa,
representing a significant setback to development gains achieved before the pandemic.

Economic growth rates
are insufficient for a
return to pre-pandemic
trends104

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure III.8

Figure III.9

Real GDP growth in Africa by subregion

Real GDP in Africa

Percentage

Index, 2019 = 100

8

120

6

115

4

110

2

105

0
100

-2

95

-4

90

-6
-8

85
2020

2021 e2022 f

2023 fAfricaEast Africa

West Africa

North Africa

Central Africa

Southern Africa

2019

2020

WESP 20202021 e2022 f

2023 f

WESP 2022

Sources: Source: UN DESA, based on projections produced with the World Economic Forecasting Model.
Note: e = partial estimate, f = forecast. Excludes Libya. The dashed line in Figure III.9 indicates pre-crisis projections.

Low vaccination levels
are exposing Africancountries to repeated
COVID-19 waves…

Most African economies remain in the grip of the pandemic. While the third wave of the coronavirus has
tapered off, at least 12 countries – Algeria, Benin, Burkina Faso, Egypt, Eritrea, Kenya, Mali, Mauritania,
Mauritius, Somalia, South Africa and Tunisia – are battling or have battled their fourth wave. In lateNovember 2021, a new variant, Omicron, was detected in Botswana and put the world on edge after
South Africa announced a surge in cases. Though the impact of each wave is unknown, the death tollfrom future waves in Africa would likely be high, given case fatality rates that rank among the highest
in the globe (such as in Egypt, Somalia and Sudan). The continent remains the most undervaccinatedin the world, with just over 10 per cent of its 1.3 billion people vaccinated with at least one dose (figure
III.10). Most countries have vaccinated less than 5 per cent of their populations, failing to meet theWorld Health Organization (WHO) vaccination goals of 10 per cent coverage by September 2021 and40 per cent by the end of 2021. Only five African countries have accomplished the latter (Cabo Verde,
Mauritius, Morocco, Seychelles and Tunisia). The vaccine roll-out has been hampered by affordability,
hesitancy,10 logistics, global production constraints and vaccine hoarding abroad. Global solidarity
around vaccines has proved widely inadequate, with pledges and deliveries to the WHO’s COVAX
Facility falling short of requirements. Production facilities in Algeria, Egypt, Nigeria, Senegal and South
Africa may help boost vaccination in those countries later this year. The vast majority of countries,

10

A survey by the Africa Centres for Disease Control and Prevention on perceptions of COVID-19 vaccination foundthat misinformation in Africa is rife. Young, male and unemployed people and urban residents are more likely to be
sceptical (Africa CDC, 2021).

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

105

however, may not reach 60-70 per cent coverage before 2023 and, in some cases, not at all barring
significant changes in vaccine production and distribution.

Figure III.10

COVID-19 vaccination rates by world region (as of 20 December 2021)
Percentage of population
80
70
68.1
47.5% ofworld population
is fully vaccinated

60
57.9
54.3

50

42.8

40

44.7
36.7

30
20
10

8.6

Fully vaccinated

a
ric
Af

in Eco
tr no
an m
si ie
tio s
n

D
ec eveon loom pinie gsestAs ern
ia

W

So Ea
ut st
h an
As d
ia

A
Ca an merrib d icabe the
an

tin
La

D
ec ev
on elo
om pe
ie d
s

0

Partially vaccinatedEven promising economies face the challenges of conflict and instability. Four military coups occurred
last year, in Chad, Guinea, Mali and Sudan, and attempts were foiled in the Central African Republic,
Madagascar and Niger. UN Secretary-General António Guterres has referred to “an epidemic of coupd’états”. In Ethiopia, Africa’s second-most populous nation, civil war in the northern Tigray region
since November 2020 is a major source of tension domestically and for countries across the Horn ofAfrica. A prolonged unsettled dispute will have escalating humanitarian consequences while further
destabilizing the region and depressing investment. Tensions are also intensifying among Ethiopia,
Egypt and Sudan over the filling of the Grand Ethiopian Renaissance Dam. In the Sahel region,
humanitarian and security crises continue to deteriorate, with interethnic violence on the rise in Burkina
Faso, Chad, Mali, Mauritania and Niger. Other ongoing conflicts include civil wars in Libya and Somalia,
an Islamist insurgency in Mozambique, the “Anglophone crisis” in Cameroon and natural resourcedriven conflict in the Democratic Republic of Congo. These crises interact with and aggravate other

Sources: UN DESA, based on datafrom Our World in Data (accessedon 20 December 2021).

…and political instability
is undermining the
economic recovery

106WORLD ECONOMIC SITUATION AND PROSPECTS 2022

challenges – such as poverty, unemployment, crime, food insecurity and internal displacement – andundermine the economic potential of the continent.

The main downside
risks of the pandemic
are elevated food prices
and tightening financing
conditions

Risks to regional growth skew down due to domestic and external factors. On the domestic front,
there is a significant concern that countries will experience recurrent COVID-19 waves with possibly
more dangerous variants. Border closures could wreak havoc in African economies, disrupting theflow of medical supplies and tourism. The risks would be aggravated by further delays to vaccination
programmes. Vaccine hoarding by developed nations, including for third-dose booster shots, andaffordability constraints present serious concerns and may extend the pandemic in the continent. Evenas supplies increase, deficient infrastructure, limited access to crucial commodities such as syringes
and vaccine hesitancy may continue to slow the roll-out of vaccines. Should COVID-19 become an
endemic disease in the region, medium-term prospects would be hampered by lower consumer andinvestor confidence.
Domestic risks from upsets in crop and livestock production also cloud the outlook. Extreme weatherand conflict-related events may cause these disruptions and increase already elevated food prices,pushing up headline inflation (as in Angola, Egypt, Ethiopia, Guinea and Sierra Leone). Droughts andfloods are becoming more frequent as temperatures and sea levels continue to increase faster inAfrica than the world average (IPCC, 2021b). Conflict and unrest may escalate given greater instability,
poverty and insecurity.
On the external front, rising inflation expectations in advanced economies and other regions threaten
financing for the region. A tightening of monetary policy in the United States and global financial
conditions would dampen global economic activity and increase risk premiums, especially for more
exposed economies in Africa already grappling with elevated debt levels. This situation would decrease
access to funds for investment, with dire consequences for social and economic development.
Within the region, prospects remain subdued for the largest economies. Nigerian economic growthis projected to accelerate to 2.8 per cent in 2022 from 2.5 per cent in 2021, as the impact of thehealth crisis declines and the new oil bill and public infrastructure development boost investment.
Nevertheless, there are downside risks from an uncertain evolution of the pandemic given low
vaccination rates, high inflation and security threats. South Africa’s recovery has faced headwinds
due to a sluggish vaccine roll-out and damaging civil unrest during the summer of 2021. Its economy
grew by an estimated 3.8 per cent in 2021, not enough to compensate for the 7 per cent drop in 2020.
With the outbreak of the Omicron variant spelling dire economic troubles for the country, especiallyfor tourism, prospects are gloomy. Growth is forecast at only 2.3 per cent in 2022. Frequent power
outages, high unemployment, inequality and corruption will continue to weigh on productivity growth.
In Egypt, after near stagnant economic growth in 2020, a robust recovery is underway with real GDP
growth at an estimated 6.1 per cent in 2021 and forecast at 5.7 per cent in 2022. The recovery has
been led by solid growth in private consumption, exports and private investment amid easing balanceof-payments constraints due to more favourable external conditions. Both public and external debt are
growing at alarming rates, however, posing risks.

REGIONAL DEVELOPMENTS AND OUTLOOKS

107

Among commodity exporters, strong global demand and high prices provide a promising outlook. The

Higher commodity prices
support some exporters
while other countries
await the return of
tourism

CHAPTER III

upturn in global commodity prices is giving some breathing room to energy, metals and agricultural
producers after two commodity price crashes in five years. The financial windfall is providing crucial
improvements in national income and government spending and investment. The rise in commodity
prices will likely be transitory, however, and insufficient to generate robust, sustainable growth. The
need for economic reform and diversification will remain high on the development agenda.
Tourism-dependent economies face improving prospects, though from a low base. These are driven by
the loosening of travel restrictions and economic recovery in origin markets in Europe and Asia, as wellas higher traveller confidence associated with successful containment measures and relatively highvaccination rates (as in Cabo Verde, Comoros, Mauritius, Morocco, Sao Tome and Principe, and Tunisia).
Yet global tourist arrivals are not expected to return to 2019 levels before 2023 and quite possibly 2024
(UNWTO, 2021b). Economic recovery in these countries will likely be difficult and vulnerable to renewed
shocks to global travel, including from new variants. Tourist-dependent industries, such as wildlife
conservation and environmental protection, and informal workers in the sector are expected to face
another difficult year, with aggravating long-term effects.
Labour markets and social conditions lag economic growth in Africa. Growth in working hours stalled
in 2021, remaining 5.3 per cent below levels at the end of 2019 (ILO, 2021d). Labour productivity
declined in 2021 with average output per hour worked 1.4 per cent lower than in 2020, except in North
Africa. This contrasts with positive productivity growth in developed economies. It follows a mediumterm decline in African labour productivity since 2016. With 85.8 per cent of the labour force and89.7 of the female labour force in informal employment (ILO, 2018), the ability of governments toprovide targeted assistance to those in need, especially during the pandemic, proved very limited. The
global economic crisis in 2020 increased extreme poverty in Africa by 38.4 million people, and in 2021,
another 8.6 million fell below the extreme poverty threshold. Given predicted GDP per capita growthof less than 2 per cent in 2022-2023, the poverty headcount rate in Africa will remain elevated (seebox III.2). Women have been disproportionally affected by job losses in hard-hit sectors, increased
domestic care, exposure to domestic violence and reduced access to sexual and reproductive care
(UN Women, 2020). Young African women are now 60 per cent more likely than men not to be in
employment, education or training (ILO, 2020). High unemployment, poverty and inequality afflicting
young, increasingly tech-proficient and urbanized populations will present substantial political andpolicy challenges ahead.

Stagnant working hours
and productivity growth
contribute to poverty andinequality

108

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Box III.2

The quantity and quality of economic growth fosters poverty reduction in Africa
Extreme poverty in Africa has dropped from over 50 per cent of the population in 2002 to 41 per centin 2018 (figure III.2.a). From 2002-2014, the poverty rate fell by 1.2 percentage points per year, mainly
due to robust economic growth, with average GDP per capita increasing by 2.6 per cent over thisperiod. Even so, the region added about 13 million poor people due to population growth. Since 2014,reflecting in part the 2014-2015 decline in global commodity prices, annual per capita GDP growth has
been negative. Africa’s poverty headcount rate decreased by less than 0.5 percentage points per year
from 2014-2018.
COVID-19 increased the number of newly poor people in Africa by up to 55 million in one year, morethan the combined total since 1999. Achieving the first Sustainable Development Goal, to end extreme
poverty by 2030, was unlikely for most African countries even before the pandemic. It is now evenfurther out of reach. Although income growth appears to be the main driver of poverty reduction, its
decomposition reveals striking differences across countries in terms of inequality (ECA, 2021).

Figure III.2.a

Poverty headcount rate and annual GDP growth
Percentage

Percentage

80

5

60

4
3

40
2
20

1
0
18
20

17
20

16
20

15
20

14
20

11
20

08
20

05
20

02
20

99
19

96
19

93
19

19

90

0

-1
-2

Source: ECA calculations basedon data from the World Bank
PovcalNet database (accessed in
September 2021).

-3-4
Poverty headcount ratio (left-hand scale)

Annual GDP growth (right-hand scale)CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

109

Deep poverty and vulnerability exacerbate poverty reduction challenges
A key challenge to poverty reduction in Africa is how deep poverty remains in many countries. On
average, the depth is 13.1 per cent, implying that the average poor person is 13.1 per cent below
the poverty threshold (figure III.2.b). There is wide variation, with the poor less than 1 per centbelow the poverty line in North Africa, but 13-18 per cent below in the other four subregions. In lowincome countries, the average poor person is nearly 20 per cent below the poverty line. The six mostaffected countries (Burundi, Democratic Republic of Congo, Central African Republic, Guinea-Bissau,
Madagascar and Zambia) have a depth of poverty between 30-39 per cent. The 10 countries in theworld with the deepest poverty are all in Africa.

Figure III.2.b

Depth of poverty in Africa
Percentage points below poverty threshold
North
AfricaWest
AfricaCentralAfricaEast
AfricaSouthern
Africa

(6)

(15)

(6)

(12)

(11)

Lowincomecountries(20)

Middleincome
countries
(30)

-0.9

-8.7

Africaaverage
-13.1

-13

-14.2

-14.3

-17.8
-19.7

Another key challenge to ending poverty in Africa is the high proportion of people who live just above
the poverty line. About 175 million people have consumption levels about 10-33 per cent above theextreme poverty line. They are not considered poor but remain vulnerable to falling into poverty. About
58 million people are extremely vulnerable as their mean consumption is only 10 per cent above thepoverty line. A very small drop in consumption can be enough to push them under the line. This grouplikely explains the sharp increase in poverty headcount numbers due to COVID-19. West and East Africa
have the largest shares of people vulnerable to falling into poverty, with Ethiopia and Nigeria the biggest
contributors. East Africa and Southern Africa have the largest proportions of people most vulnerable

Source: ECA calculations basedon data from the World Bank
PovcalNet database (accessed in
September 2021).
Note: Figures in parantheses are
the number of countries in eachcategory.

110WORLD ECONOMIC SITUATION AND PROSPECTS 2022

to staying in poverty (or the chronic poor) at 34.6 and 33.3 per cent, respectively. Unsurprisingly, lowincome countries have the largest proportion of people (36.2 per cent) most vulnerable to remaining
in poverty after a shock.a
Economic performance is key in reducing poverty. The transformation of growth to poverty reduction ismediated by relative contributions of changes in income and inequality. Currently, a return to declining
rates of poverty is uncertain given a weak economic recovery with considerable downside risks,such as low vaccine availability and slow roll-outs, the emergence of possible variants, constrained
fiscal space and high debt repayment obligations. Those far below the poverty line will require robust
targeted income support and other social protection measures.
To revert to the pace of poverty reduction in 2002-2014 and accelerate implementation of the 2030
Agenda and Africa’s Agenda 2063, countries need higher growth rates of at least 7 per cent annually.
Since high inequality reduces the likelihood that economic growth will translate into poverty reduction,
policies must also narrow inequalities in opportunities and set growth on an inclusive path. This could
be done through continental initiatives, such as the African Continental Free Trade Area, to stimulate
value added intra-Africa trade, structural transformation and job creation. It could build on poverty
reduction strategies that hedge against extreme income volatility due to present and future shocks.
a ECA calculations based ondata from the World Bank
PovcalNet database (accessedin September 2021).
Authors: Adrian Gauci andHopestone Kayiska Chavula, United
Nations Economic Commission
for Africa

Fiscal consolidation
began during the
pandemicWith COVID-19 exacerbating economic vulnerabilities, African countries should also emphasize
measures including effective debt management, increased expenditure efficiency and greater
domestic revenue allocations in sync with the Sustainable Development Goals. They should harness
the benefits of international debt relief options, such as the Debt Service Suspension Initiative, theHeavily Indebted Poor Countries Initiative and the Common Framework for Debt Treatment. This would
strengthen recovery and eventually diminish the depth of poverty and vulnerability.

Though African governments initially responded to the crisis by increasing fiscal outlays, fiscal
sustainability concerns preceding the pandemic meant a relatively quick return to fiscal consolidation.
Governments already had little room to accommodate revenue shortfalls caused by the pandemic andthe budgetary costs of response packages. Financing needs were mostly covered by international
emergency support, including IMF, World Bank and bilateral assistance, and debt service relief fromthe G20 Debt Service Suspension Initiative and the IMF Catastrophe Containment and Relief Trust. In
2021, while still fighting second and third waves of COVID-19, governments began fiscal consolidation
to maintain sufficient external reserves, protect currency pegs for some and ensure debt servicing
capacity, despite weak and fragile economic recoveries. In developed countries, by contrast, greater
policy buffers have allowed robust support and a quadrupling of government borrowing since theoutbreak of the pandemic (figure III.11). Fiscal balances are expected to continue shrinking acrossthe continent. In August 2021, the $650 billion Special Drawing Rights allocation boosted reserves
somewhat and could be amplified by voluntary channelling of allocations elsewhere. China, forinstance, announced it would shift $10 billion in its Special Drawing Rights to African nations.

CHAPTER III

111

REGIONAL DEVELOPMENTS AND OUTLOOKSDespite fiscal tightening, debt levels are projected to remain high and rising. Government interest
expenditure continues to absorb a rising share of revenues and is already above a third in certain
countries in the West African Economic and Monetary Union (IMF, 2021c). This reflects a build-up
in debt, persistently weak revenue mobilization and for some countries the end of the Debt Service
Suspension Initiative. Rising interest expenditure reduces fiscal space to support economic recovery
and the 2030 Agenda for Sustainable Development. Already, several countries spend more on debt
servicing than on health care. To this end, a new repo market launched by the United Nations Economic
Commission for Africa in November 2021 should trim billions of dollars from government borrowing
costs starting in 2022. Still, debt relief as well as emergency assistance may be necessary for countries
in higher debt distress.

Figure III.11

Government borrowing as a share of GDP
Index, 2019 = 100
400
378

350

378
363

300
250
200
150
144
100

106

94

50
0

2020
Africa2021 e2022 fDeveloped countries

African central banks are mostly maintaining accommodative monetary policy stances but this mightchange in the short term. In 2021, only a small number of countries changed policy interest rates,
either through cuts (as in Ghana, Liberia, the Republic of Congo, Seychelles and Uganda) or hikes(Angola, Ghana, Lesotho, Mozambique, South Africa, Zambia and Zimbabwe). Leniency in developed
countries towards rising inflation has allowed crucial policy space for African central banks to prioritize
economic growth and narrow output gaps, even if that meant tolerating rising inflationary pressures

Source: UN DESA, based on
projections produced with theWorld Economic Forecasting
Model. Excludes Libya.
Note: e = partial estimate,f = forecast.

Monetary policy stances
remain accommodative
but global and domestic
conditions add pressure

112WORLD ECONOMIC SITUATION AND PROSPECTS 2022

(Democratic Republic of the Congo, Nigeria and Sierra Leone). Upside risks to inflation from currency
depreciation and planned consumer tax hikes as well as reduced subsidies due to fiscal consolidation
may require central bankers to raise interest rates sooner rather than later. Fading monetary stimulus
along with fiscal consolidation would complicate already challenging recoveries.

Countries are tasked withfighting the pandemic
while boosting growthand development

Moving forward, saving lives from COVID-19 must continue to take precedence. Keeping a close watch
on the emergence of more transmissible and lethal variants, at home and abroad, and responding withswift action must be a priority. Faster and more fair distribution of global vaccine supplies, expansion of
local vaccine manufacturing, improvements in the distribution infrastructure and measures to combat
vaccine hesitancy are necessary to control the pandemic in Africa and avoid stop-and-go economic
processes.
For the medium term, the single most viable route to inclusive and sustainable development in Africa
is through advancing the structural transformation of economies and building productive capacities.
A key focus for many countries will be services and manufacturing-driven industrialization with formal
and decent employment. The industrialization of agriculture and minerals processing could be avenues
for progress, as recognized in several national development plans. Another key area is to speed thedigital revolution. This entails deploying new technologies in areas such as revenue collection andanti-corruption efforts, improving 3G and 4G network coverage, and advancing 5G networks, including
beyond major cities. Firms stand to profit from new market opportunities, enhanced supply-chain
efficiency and resilience as well as productivity increases. Consumers should see more productchoices and learning opportunities through digital transformation.

114

East AsiaWORLD ECONOMIC SITUATION AND PROSPECTS 2022

GDP growth
Percentage
6
4

6.7

5.9

5.2
6.2

5.2

4.6

0

Total
Per capita

4.9

4.4

1.0

2

5.4

4.9

0.4

-2
-4
-6
2018

2019

2020

2021 e2022 f

2023 f

COVID-19 cases & deaths

Vaccination

Per 100,000 people

Percentage of population

as of 20 December 2021

69

World

180

Developed economies

159

Economies in transition

46

Developing economies

3,520
11,282as of 20 December 2021

6,523

57.5
68.1

36.7

74.2

45.6
44.7

55.3

684 17

Africa*708 14

East Asia

36

South Asia

62

Western Asia

8.6

13.2
76.0

68.8

ita

l

ai

sa

ts

ae

ai

sa

nr

et
s

ew

2,101

47.5

6,666

239

7,253

Latin America and the Caribbean**

37.6
13.2

42.8

56.4
48.2
57.9

70.5

ai

sa

ht

uo

s

ac

irf

a

an

2,342

Cases

DeathsPartially vaccinated (at least one dose)

Fully vaccinatedNote: The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations. The map
represents countries and/or territories or parts thereof for which data is available and/or analysed in World Economic Situation and Prospects 2022. The shaded
areas therefore do not necessarily overlap entirely with the delimitation of their frontiers or boundaries. Aggregate data for Africa, excluding Libya.
* Excluding Libya; **Excluding Bolivarian Republic of Venezuela. e: 2021 estimates. f: 2022-2023 forecasts.
Source for COVID-19 data: UN DESA calculations, based on data from Johns Hopkins University.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

115

East Asia: a nascent economic recovery with rising downsiderisks•

Increasing downside risks and uncertainties cast a shadow on East Asia’s nascent economic recovery.

•

The lingering pandemic continues to weigh on progress in achieving the 2030 Agenda for
Sustainable Development.

•

Macroeconomic policies should remain accommodative and targeted to fostering inclusive andsustainable recovery.

East Asia’s economic performance largely rebounded in 2021. Headline GDP growth was an estimated
6.7 per cent following the sharp deceleration in 2020. The recovery is nascent, however. A resurgenceof COVID-19 has disrupted economic performance supported by strong policy stimulus and a recovery

East Asia’s economies
have rebounded from theworst but remain fragile…

in external demand. Economic growth is forecast to moderate to 4.9 per cent in 2022 as base effects
disappear. While countries’ reopening could shore up economic activities, the uneven distribution of
vaccines, a still low pace of vaccination and unknown vaccine efficacy against new variants of the virus
mean that the pandemic will linger and could derail a fragile economic recovery. Additional headwinds
come from a possible decline in export demand, prolonged supply-side challenges, rising concerns
around financial instability and the possibility of a larger-than-expected slowdown in China’s economy
amid lingering trade tensions with the United States. Since pandemic control will continue as a policy
priority in the near term, macroeconomic policies should remain accommodative and targeted tofostering an inclusive and sustainable recovery.
The uptick in East Asia’s headline GDP growth masks large divergence in economic performanceacross countries. Overall, relatively stronger recovery was seen in China, the Republic of Korea and… and with divergence ineconomic performance

Singapore, due to early COVID-19 containment measures, quick vaccine roll-outs and strong external
demand. In contrast, the Delta variant outbreak slowed recovery in many countries in the Associationof Southeast Asian Nations (ASEAN), including Indonesia, Malaysia, the Philippines, Thailand and Viet
Nam. Tourism-dependent countries, especially the small island developing States in the Pacific, were
hit doubly by new waves of COVID-19 and a plunge in tourist arrivals. Ongoing political turmoil has
severely weighed on Myanmar’s economy.
Strong global demand for Asian manufacturing and exports has underpinned the region’s headline
economic growth. A quick rebound in household spending in the developed countries buoyed demandfor electronics, electrical and information technology equipment, and automobiles, which particularly
benefited China, the Republic of Korea, Singapore and Taiwan, Province of China (figure III.12).11
Investment was channelled into machinery and equipment, supporting export manufacturing.

11

Improving external demand also benefited several ASEAN economies (such as Indonesia, Malaysia and Thailand)and commodity exporters (Brunei Darussalam and Mongolia). New waves of COVID-19 cases offset economic
gains, however.

Trade, the major
growth driver during
the pandemic, is losing
momentum…

116

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure III.12

Demand-side contributions to growth in select East Asian countries
Percentage points
20
15
10
5
0
-5
-10
-15

China

Source: UN DESA, based ondata from CEIC (accessed on 29
November 2021).
Note: For China, the consumption
bar covers both the private andgovernment sectors.

Republicof KoreaIndonesia

Private consumption

Malaysia

Philippines

Government consumption

Singapore

Investment

Taiwan,Province ofChina

Q1-Q3 2021

Q1-Q3 2020

Q1-Q3 2021

Q1-Q3 2020

Q1-Q3 2021

Q1-Q3 2020

Q1-Q3 2021

Q1-Q3 2020

Q1-Q3 2021

Q1-Q3 2020

Q1-Q3 2021

Q1-Q3 2020

Q1-Q3 2021

Q1-Q3 2020

Q1-Q3 2021

Q1-Q3 2020

-20

ThailandNet export

GDP growth (percentage)

Shipment backlogs, surging freight costs and temporary quarantine restrictions in key manufacturing
and shipping areas have slowed the region’s export growth. Semiconductor shortages due to adverse
weather events, COVID-19-induced production disruptions and shipping congestion have significantly
extended delivery times.12 Ongoing technology and trade tensions between China and the United States
have further hampered production and exports of semiconductors. Rising energy prices and electricity
shortages are also weakening exports. Power rationing in China, for instance, has impeded production
at numerous factories, including those that supply components to large manufacturers of consumer
electronics and automobiles. Going forward, demand for manufactured goods from Asia is expected
to gradually decline as economies elsewhere heal from the pandemic and restore their local supplies.

…while strong domestic
demand recovery is
subject to the progressand efficacy of vaccine
programmes

As export growth begins to moderate in the region, domestic demand should, in principle, play a bigger
role in driving economic growth. Many East Asian countries have observed stronger domestic demand(figure III.12) through continued policy stimulus and reopening. Ongoing domestic demand as a driver

12

Average delivery times for semiconductors increased from 12 weeks in early 2020 to more than 20 weeks in July
2021 (King, 2021).

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

117

of growth is contingent on containing the virus, however. New waves of COVID-19 have triggered
containment measures over 2021, which heavily weighed on private consumption and investment.
Vaccinations offer some hope, yet despite gathering pace in the second half of 2021, vaccination
progress remains highly uneven. By mid-December 2021, Brunei Darussalam, Cambodia, China,
Malaysia, the Republic of Korea and Singapore had over 70 per cent of their populations fully
vaccinated. In contrast, some least developed countries and small island developing States lagged
behind. Vaccination rates in Myanmar, Papua New Guinea, the Solomon Islands and Vanuatu were stillless than 30 per cent (figure III.13). Limited access to vaccines and inadequate capacity for vaccineroll-outs further increase the vulnerability of these countries.

Figure III.13

Vaccination progress in East Asia (as of 20 December 2021)
Percentage of population
0

20

40

60

80

100

Brunei Darussalam
China
Cambodia
Republic of Korea
Singapore
Malaysia
Taiwan, Province of China
Viet Nam
Fiji
ThailandSamoa
Mongolia
Hong Kong, Special Administrative Region of China
Indonesia
Lao People’s Democratic Republic
Philippines
Kiribati
Timor-Leste
Vanuatu
Myanmar
Solomon Islands
Papua New Guinea
Fully vaccinatedPartially vaccinatedSource: UN DESA, based on datafrom Our World in Data (accessedon 20 December 2021).

118

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

As the pandemic lingers, East Asian countries have started considering long-term strategies to deal
with the virus. For instance, while China is sticking with its “zero COVID-19” policy, Indonesia, Malaysia,
the Republic of Korea, Singapore and Thailand are pursuing approaches to “coexist” with the virus. No
matter which path countries choose, policymakers remain cautious about fully reopening economies;
the Delta outbreaks showed the high risks of new and more transmissible variants. While vaccines are
assumed to generally reduce the severity and duration of COVID-19 symptoms, their efficacy against
new variants is still unknown. This means that some restrictive measures will likely remain in place
during the forecast period, with targeted lockdowns and mobility restrictions introduced if infection
rates surge again. Border openings are likely to be gradual and come with entry requirements. All suchmeasures will likely further increase social and economic costs and delay full recovery.

China’s economic
slowdown adds additional
headwinds to the region’s
near-term outlook

China’s “zero COVID-19” policy constrains the economy’s full recovery. Renewed restrictions in
response to a surge in infections in the second half of 202113 weighed on consumer spending andweakened the pace of initially strong recovery. At the same time, China’s policy efforts to stabilize
the property market have slowed investment.14 This will likely sustain China’s long-term resiliencefor several reasons. First, slower growth in property prices could curb rising inequality and support
China’s pursuit of “common prosperity”.15 Second, reducing household indebtedness from mortgages,
which account for 76 per cent of household debt (People’s Bank of China, 2020), could advance China’s
economic restructuring strategy, which prioritizes domestic consumption. Third, limiting the exposureof highly indebted private property developers will likely reduce financial risks. Given that the property
sector potentially contributes about a third of China’s GDP (Rogoff and Yang, 2020), a sharp pricecorrection would not only adversely affect investment but also impair household consumption andpotentially trigger broader financial instability.
In 2021, China’s economy grew an estimated 7.8 per cent with an expectation of moderating to 5.2 percent in 2022. The slowdown could have regional and global spillovers. For instance, sharp declines in
new construction could reduce demand for raw materials from the rest of the world. At the same time,reining in the property market could lead to defaults by several large private property developers. A
default would have wide repercussions on banks and other financial institutions as well as investors
who hold these companies’ offshore bonds. While China is cautiously managing the situation, concerns
about a spillover are mounting.

A shift in global liquidity
conditions raises
financial stability worries

Quicker-than-expected tapering of quantitative easing in the United States raises financial stability
concerns for East Asia. As the recovery in the region is in the early stages, a sudden change in global
financial conditions could trigger capital outflows and increase exchange rate volatility. Over 2021,
while foreign direct investment inflows were steady, a few ASEAN economies (including the Philippines
and Thailand) experienced capital outflows through portfolio channels amid the Delta wave. Almost all
13
14
15

As of early November 2021, at least 19 of 31 provinces in China have reported infections with the Delta variant.
Different provinces re-introduced temporary restrictive measures based on local needs, including mobility
restrictions, school closures and quarantines.
Investment in construction in China contracted by 1.8 per cent in the third quarter of 2021, compared with anaverage quarterly growth of 6 per cent during 2015-2019.
The concept of “common prosperity” was first put forward by Mao Zedong, Chairperson of the Central Committeeof the Communist Party of China, in 1953. China is giving a new push to it in 2021.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

119

currencies in the region depreciated against the United States dollar to some extent, except for China’s
renminbi. With domestic economic conditions still weak, countries will be highly sensitive to changes
in the interest rates of major developed countries. Countries with high debt levels, especially external
debts, will be particularly vulnerable, such as Indonesia, Malaysia and Thailand, where external debt
was around or above 150 per cent of GDP in the first two to three quarters of 2021.16
The pandemic is threatening to undermine some development progress in East Asia. The adverse
impacts are expected to continue and deepen scarring effects. In particular, temporary restrictive
measures have disrupted labour market recovery. The ASEAN region may see working-hour losses ofan estimated 7.4 per cent in 2021, which implies only limited improvement compared with 2020 (ILO,

A lingering pandemic
shadows progress on
the 2030 Agenda for
Sustainable Development

2021a). Working-hour and job losses have caused millions of people to lose at least part of their labour
income. In the first half of 2021, labour income in the ASEAN region contracted by 5.7 per cent (ILO,
2021a). Job losses are exacerbating already high inequality as women, young workers and informal
workers have been affected disproportionately. Around 8.6 million people in East Asia were pushed
into extreme poverty in 2019-2021.
The pandemic’s contribution to reducing pollution and emissions due to mobility restriction has provenshort-lived. Air pollution (measured by PM2.5 emissions) has exceeded pre-pandemic levels. The recent
energy crunch risks derailing the transition to low-carbon energy. Some firms may turn to “dirtier”
energy such as diesel. This comes as rising climate risks already threaten the region’s recovery. For
instance, Fiji and Papua New Guinea experienced cyclones and floods in early 2021, adding economic
costs to recovery. Taiwan, Province of China experienced its worst drought in 56 years in April 2021,
which affected semiconductor production. East Asian countries are taking actions to address climate
risks, with China and the Republic of Korea announcing they intend to reach carbon neutrality by 2060
and 2050, respectively. The Philippines and Viet Nam have committed to moving away from coal.
Inflation is expected to remain largely in check in East Asia. In 2021, headline inflation was an estimated
1.5 per cent. Most countries had inflation below or within central bank targets (figure III.14) although
it trended upward due to rising food and fuel prices and supply-chain disruptions. Some countries
observed above-target inflation related to particular factors, such as the Republic of Korea (higher
costs of petroleum, housing rentals and services) and the Philippines (a spike in food inflation causedby adverse weather conditions). Going forward, headline inflation is projected at 2 per cent in 2022.
While rebounding commodity prices and supply bottlenecks could increase prices, broader inflationarypressure is unlikely as the reopening of economies will be very cautious. Most economies are expected
to operate below pre-crisis levels (figure III.15) with low consumer purchasing power likely keeping asurge in producer prices from passing through to consumer prices. Ongoing supply shortages andnetwork disruptions are anticipated to recede over time as more countries reopen and demand shifts
away from goods to services.

16

UN DESA estimate, based on data from CEIC (accessed on 29 November 2021).

Inflationary pressure is
still low120

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure III.14

Inflation and inflation targets in East Asia
Percentage
10

8

6

4

2

Fiscal policies could be
more targeted to support
an inclusive and green
recovery

Inflation target

Consumer price index (January 2021)

Consumer price index (latest)

Mongolia

MyanmarPhilippines

SingaporeRepublic of Korea

Cambodia

Malaysia

Taiwan, Province of China

Thailand

Viet Nam

Brunei Darussalam

Hong Kong, SAR China

Inflation targeting range

Lao People’s Democratic Republic

Source: UN DESA, based on datafrom CEIC and Central Bank News
(both accessed on 29 November2021).

Indonesia

-2

China

0

Supportive fiscal policies are critical to shore up the region’s domestic demand, especially during
new waves of COVID-19 and new rounds of restrictive policies. From January to October 2021, total
COVID-19 policy responses cost an estimated $266 billion, equivalent to 1.4 per cent of the region’s
GDP.17 Countries have extended fiscal stimuli introduced in 2020 (such as Indonesia18), implemented
new programmes to contain the pandemic and fund social security programmes (Lao People’s
Democratic Republic and Malaysia19) and introduced new tax relief to support small firms (China,
Malaysia and the Philippines).

17
18
19

In 2020, policy responses totalled about $970 billion in East Asia. The amount of fiscal stimulus is estimated basedon the IMF’s Policy Responses to COVID-19 and the Asian Development Bank’s COVID-19 Policy Database (bothaccessed on 13 November 2021).
Indonesia increased the budgeted amount of a national economic recovery programme from IDR579.8 trillion in2020 to IDR699.4 trillion in 2021.
Lao People’s Democratic Republic allocated LAK100 billion in 2021 for prevention, control and treatment of COVID-19
cases; Malaysia accelerated social security payments and provided additional funds for vaccine procurement.

CHAPTER III

121

REGIONAL DEVELOPMENTS AND OUTLOOKS

Figure III.15

Growth of real GDP from 2019 to 2022, based on projections made in 2022 and 2020
Percentage
25
20
15
10
5
0
-5
-10
-15

Viet Nam

Vanuatu

Timor-Leste

Thailand

Solomon Islands

SingaporeSamoa

Republic of Korea

Philippines

Papua New Guinea

MyanmarMongolia

Malaysia

Kiribati

Lao People’s Democratic Republic

Pre-pandemic projection

Indonesia

Fiji

Latest projection

Hong Kong, SAR China

China

Cambodia-25

Brunei Darussalam-20

Increasing public spending and decreasing tax revenue (due to economic output that is below the
pre-pandemic level along with tax cuts) have widened fiscal deficits and increased public debt-toGDP ratios. The region’s median fiscal deficit as a share of GDP increased from 1.7 per cent in 2019
to an estimated 5.8 per cent in 2021. The gross government debt-to-GDP ratio grew from 40.5 toan estimated 47.8 per cent over the same period.20 While premature fiscal consolidation should be
avoided to prevent reversal of recovery gains, shrinking fiscal space requires more targeted public
spending that is better aligned with the 2030 Agenda.21 At the same time, countries could turn tovarious policy options to better mobilize domestic and international financial resources (box III.3).

20
21

Calculated based on October 2021 data from the IMF’s World Economic Outlook Database (accessed on 14
November 2021).
The United Nations Economic and Social Commission for Asia and the Pacific (2021) points out that only a small
share of the stimulus in Asia and the Pacific supported gender equality. A large part of the spending encouraged
more production and consumption of fossil fuels without green commitments.

Source: UN DESA.

122WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Box III.3

Fiscal policy and financing options to build forward better
The scars of past economic and non-economic shocks could last for a long time in East and South
Asia (ESCAP, 2021). The region has high-quality public infrastructure and strong human capital,and even during the pandemic maintained ample fiscal space to help withstand the crisis. Sizeable
fiscal stimulus buoyed domestic demand and supported households and companies in need. Whileaccommodative fiscal policies are still required for recovery, however, fiscal space constraints willtighten in some countries. For example, while gross financing needs (the sum of the primary fiscal
deficit and maturing debt obligations) in selected East and South Asian economies are expected tofall during 2021-2023 from the level in 2020, projected levels are far higher than in 2019 (figure III.3.a).
Public debt sustainability is tenuous in some countries, more so given prospects for tightening global
financing conditions and higher borrowing costs.
Figure III.3.a

Gross financing needs in selected East and South Asian countries
Share of GDP, percentage

Percentage points
15

30

10

20

5
10
0
0

-5

-10

-10

n

s

is
an
gh
Af

la
Is

ta

nd

pa
on
m
lo
So

Pa

2021–2023 average (left-hand scale)

Ne

M

al

di

ve

sh
de
la
ng

Ba

on
M

go

lia

ar
nm
ya
M

in
Gu

pu

a

Ne

w

m
Sa

oa

st
ki
Pa

Source: ESCAP, based on Munevar,
2020.

l

-20
s

-30
ea

-15

an

-20

Difference from 2019 (right-hand scale)

Governments are exploring options to mobilize fiscal resources beyond traditional sources ofborrowing and to improve public debt management. Tighter fiscal space also means that countries
need to consider risk sharing to cope with coming shocks and rely less on fiscal resources. There areseveral different fiscal and financing policy options in the region.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKSOffshore sovereign and diaspora bonds: During 2013-2020, the Government of Lao People’s
Democratic Republic and other public entities issued 43 Thai baht-denominated bonds in Thailand,with an outstanding value of $2.1 billion at the end of 2020. These issuances benefitted from Thailand’s
relaxation of investment rules and close economic ties with Lao People’s Democratic Republic. In asimilar vein, smaller countries in Asia and the Pacific could tap domestic savings in neighbouring
emerging economies with close economic connections. Examples include China for Mongolia, andIndia for Bhutan and Nepal. Multilateral development partners could support these initiatives bydeveloping common market practices for cross-border bond issuances. In addition to offshore bonds,
governments could also consider diaspora bonds, especially in countries with large remittance flows
as a share of GDP, such as Nepal and Tonga. To benefit from this type of bond, issuing countries could
conduct demand analysis to gauge the willingness and ability of diaspora communities to invest inbonds, offer diversity in bond structures and launch marketing campaigns.
Debt swaps for development: Bangladesh, Indonesia, Pakistan and the Philippines engaged in debt
swaps during the 1980s and early 2000s. While these agreements were broadly consistent with national
development policies, strong frontloading of counterpart payments reduced fiscal space in Indonesia
in the first few years. The overall impact on public debt reduction was small given the modest scaleof debt relief. Learning from past lessons, countries should conduct independent feasibility studies to
identify the amount and profile of swappable public debt, beneficiary projects, co-financing sources
and the debt discount rate. Relevant stakeholders could seek to reduce the transaction costs of debt
swaps, since elements such as a time-consuming negotiation process, feasibility studies and financial
and legal fees can add up to 5 per cent of the debt value. Other efforts can be made to scale up debt
swaps and minimize fund fungibility.
Emergency financing mechanisms: Many countries in East and South Asia have dedicated reserve
funds for natural disasters. But catastrophic risk insurance schemes, based on a risk-transfer modality
and especially important during low-frequency, high-impact events, remain uncommon. Some examples
of existing schemes include agricultural insurance in Bangladesh, India and Mongolia, earthquake
insurance in China and public asset insurance in Indonesia and Viet Nam. Covered losses are mostly
small, however. At a subregional level, a catastrophe risk insurance pool for the Pacific islands was set
up in 2016 and has so far made three payouts worth $6.7 million to Tonga and Vanuatu. To enhance
emergency financing mechanisms, countries need to incorporate sovereign catastrophic risks into
government financial planning and explore risk-transfer financial instruments for emergencies.
Development partners can help by establishing more regional catastrophic risk-sharing initiatives andcoordinating regional emergency funds.
Sustainable investing by public institutional investors: Financial assets under management bypension funds and sovereign wealth funds in Asia and the Pacific stood at about $8.5 trillion at the endof 2020. Relative to GDP, these assets are particularly large in Brunei Darussalam, Solomon Islands,
Timor-Leste and Tuvalu. Yet the extent of sustainable investing by public institutional investors appears
limited. Moving forward, one policy option is to relax investment rules in line with a careful review of
the impact on portfolio risk. For example, certain pension funds in India, Pakistan and the Republic of

123

124

Author: Vatcharin Sirimaneetham,
United Nations Economic andSocial Commission for Asia andthe PacificWORLD ECONOMIC SITUATION AND PROSPECTS 2022

Korea are not allowed to invest in domestic equities or allowed but with maximum limits. Similarly,
there are often maximum portfolio limits on investments in sovereign bonds and requirements toinvest only in corporate bonds with certain ratings. Pension funds in India and Indonesia are prohibitedfrom investing in foreign equities and bonds.

Still low inflation leaves
room to maintainaccommodative monetary
policies

Low and relatively stable inflation offers some flexibility for central banks. Most kept accommodative
monetary policy stances in 2021, maintaining policy rates at historically low levels after massive ratecuts in 2020. Central banks have also used other tools, including lowering reserve requirement ratios,
extending lending operations and purchasing assets. Rising inflationary pressure in some countries
has prompted central banks to change policy direction. The Bank of Korea raised its policy rate inAugust 2021, aiming to cool the real estate sector. The Monetary Authority of Singapore unexpectedly
tightened policy in October 2021 to counter imported cost pressures. In 2022, overall monetary stances
still need to be accommodative to sustain a fledgling recovery, however. While changing monetary
policy stances in major developed countries, especially the tapering of quantitative easing in the UnitedStates, may pressure East Asian central banks to begin tightening, a cautious approach is warranted ifchanges in interest rates are not driven by better economic conditions.

126

South AsiaWORLD ECONOMIC SITUATION AND PROSPECTS 2022

GDP growth

7.4

Percentage
6

5.9

4.7

2

Total
Per capita

6.2

3.1

4

5.6

4.8

4.5

3.5
1.9

0
-2

-4.7
-4
-6
2018

-5.8

2019

2020

2021 e2022 f

2023 f

COVID-19 cases & deaths

Vaccination

Per 100,000 people

Percentage of population

as of 20 December 2021

69

World

180

Developed economies

159

Economies in transition

46

Developing economies

3,520
11,282as of 20 December 2021

6,523

57.5
68.1

36.7

74.2

45.6
44.7

55.3

684 17

Africa*708 14

East Asia

8.6

13.2
68.8

76.0

ita

l

ai

sa

ts

ae

ai

sa

nr

et
s

ew

2,101

47.5

6,666

36
62

Western Asia

239

7,253

Latin America and the Caribbean**

37.6
13.2

42.8

56.4
48.2
57.9

70.5

ai

sa

ht

uo

s

ac

irf

a

an

2,342

South Asia

Cases

DeathsPartially vaccinated (at least one dose)

Fully vaccinatedNote: The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations. The map
represents countries and/or territories or parts thereof for which data is available and/or analysed in World Economic Situation and Prospects 2022. The shaded
areas therefore do not necessarily overlap entirely with the delimitation of their frontiers or boundaries. Aggregate data for Africa, excluding Libya.
* Excluding Libya; **Excluding Bolivarian Republic of Venezuela. e: 2021 estimates. f: 2022-2023 forecasts.
Source for COVID-19 data: UN DESA calculations, based on data from Johns Hopkins University.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS127

South Asia: moderate economic prospects amid large
uncertainties and more constrained policy space•

South Asia’s recovery is gathering steam but remains fragile and subject to downside risks.

•

Revitalizing employment growth is crucial to tackle worsening poverty and inequality.

•

Amid higher public debt and prospects for tightening financial conditions, fiscal policy faces
increasing constraints.

The economic recovery continues to gain momentum in South Asia amid contained COVID-19 infections
and higher mobility, robust remittance inflows and broadly supportive macroeconomic policy stances.
After an estimated expansion of 7.4 per cent in 2021, regional GDP is projected to expand at a more
moderate pace of 5.9 per cent in 2022 as base effects gradually disappear.22 The recovery, however, isSouth Asia confronts
challenges to achievingrobust and inclusive
growthstill fragile, uneven and subject to pandemic-related uncertainties and downside risks. A lagging labour
market recovery illustrates the severe socioeconomic difficulties for large segments of the population.
Achieving robust, sustained and inclusive growth will be critical in tackling the region’s recent rise inpoverty and inequality, with the pandemic erasing years of progress on poverty reduction and an estimated
30 million more people in extreme poverty in 2020. A sustained recovery may prove challenging as global
financial conditions tighten, however, and monetary and fiscal policy space become more constrained.
Policymakers need to maintain essential support for the recovery and job creation, such as by prioritizing
public infrastructure and green investments that crowd-in private finance.
South Asia faces major downside risks that can strengthen headwinds in achieving the 2030 Agenda.
Relatively slow vaccination progress leaves the region vulnerable to new variants and recurrent
outbreaks. Financial constraints and an inadequate global vaccine supply continue to drag down fullrecovery in some countries. As of early December 2021, Bangladesh, Nepal and Pakistan had lessthan 26 per cent of their populations fully vaccinated (figure III.16). By contrast, the fully vaccinatedpopulation is above 64 per cent in Bhutan, Maldives and Sri Lanka. In India, a deadly wave of infection
with the Delta variant stole 240,000 lives between April and June and disrupted economic recovery.
Similar episodes could take place in the near term.
Accelerated global monetary tightening could increase volatility, trigger capital outflows and disrupt
credit growth, especially in countries with elevated debt, large financing needs and high levels of
foreign-currency-denominated debt. Significant financial distress could emerge as highly leveraged
firms face greater refinancing costs, particularly in sectors hit harder by lockdowns, even more so if theremoval of forbearance measures uncovers a large deterioration in balance sheets. In Bangladesh andBhutan, non-performing loans were elevated even before the pandemic. While still vulnerable, India is
in a better position to navigate financial turbulence compared to its situation during the “taper tantrum”
22

All growth figures for South Asia are on a calendar year basis. For fiscal year growth figures, please refer to theStatistical Annex.

The outlook is highly
uncertain and subject todownside risks

128WORLD ECONOMIC SITUATION AND PROSPECTS 2022

episode after the 2008-2009 global financial crisis. This is due to a stronger external position andmeasures to minimize risks to bank balance sheets. In the medium-term, scarring effects from higher
public and private debt or permanent impacts on labour markets could reduce potential growth andprospects for poverty reduction.

Figure III.16

South Asia’s vaccination progress (as of 20 December 2021)
Percentage of population
0

10

20

30

40

50

60

70

80

90

BhutanSri Lanka
Maldives
Iran (Islamic Republic of)
India
Bangladesh
Pakistan
Nepal
Afghanistan
Source: UN DESA, based on datafrom Our World in Data (accessedon 20 December 2021).

Economic activity
has gathered pace in
Bangladesh and India

Fully vaccinatedPartially vaccinatedIndia’s economic recovery is on a solid path, amid rapid vaccination progress, less stringent social
restrictions and still supportive fiscal and monetary stances. GDP is projected to expand by 6.7 per centin 2022 (figure III.17) after a 9 per cent expansion in 2021, as base effects wane. Robust export growthand public investments underpin economic activity, but high oil prices and coal shortages could put thebrakes on economic activity in the near term. It will remain crucial to encourage private investment tosupport inclusive growth beyond the recovery. India has taken an important step by committing to 50 per
cent of its energy mix coming from renewable sources by 2030 and to reaching net-zero emissions by
2070. Amid sound macroeconomic policies, Bangladesh has navigated the COVID-19 pandemic relatively
well. GDP is projected to expand by 6 per cent in 2022. Economic activity rides on export growth and therising demand for apparel, robust remittance inflows, and accommodative fiscal and monetary policies.
The economy of Pakistan also remains on a relatively robust recovery path. After an economic expansionof 4.5 per cent in 2021, GDP growth is projected at 3.9 per cent in 2022, driven by private consumption,

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

129

record-high remittances and fiscal support. The outlook for the Islamic Republic of Iran continues toimprove after severe difficulties in recent years, supported by rising gas and oil exports. GDP is projected
to expand by 3.1 per cent in 2022, following an expansion of 2.9 per cent in 2021.

Figure III.17

GDP growth in select South Asian countries
Percentage
10
8
6
4
2
0
-2
-4
-6

2020

2021

e

2022

ka
an
iL
Sr

Ira
Re n (
pu Isl
bl am
ic ic
of
)

l
pa
Ne

an
Pa

ki

st

an
Bh

ut

sh
de
la
Ba

ng

In

di

-10

a

-8

f

The outlook is more challenging for other countries in South Asia, including those more dependent
on tourism. In the Maldives, economic activity is gradually improving partly due to a solid reboundin international tourism. But renewed COVID-19 outbreaks, locally and abroad, could easily derail
recovery. GDP may remain well below pre-pandemic levels; the risk of debt distress could be high. In
Sri Lanka, GDP growth is projected at 2.6 per cent in 2022. Its major challenges include food shortages,
dwindling foreign reserves and sovereign debt risks. Afghanistan’s severe downturn has come amid
drastic political changes, a decline in international aid and a lack of access to offshore assets. The

Source: UN DESA.
Note: e = estimates, f = forecasts.

Sri Lanka faces major
challenges; Afghanistan
is on the brink ofeconomic meltdown130WORLD ECONOMIC SITUATION AND PROSPECTS 2022

worsening situation is leading to extreme poverty and food insecurity with the risk of the entire country
becoming a humanitarian catastrophe.23

More constrained fiscal
policy space

In South Asia, fiscal responses to the crisis were relatively restrained compared to other regions,largely due to sovereign credit ratings and debt-to-GDP ratios. Fiscal policies remain moderately
supportive as the recovery gathers pace. In India and Pakistan, fiscal deficits are projected to decline
gradually. At the same time, policy priorities have shifted towards capital expenditure. Pressures forfiscal consolidation will likely increase from higher public debt and rising borrowing costs (figure
III.18). Amid elevated social needs, a still fragile recovery and lagging employment, it is imperative to
avoid premature consolidation, however. The weak debt situation emphasizes the need for revenue
mobilization (box III.3) as well as further multilateral support, especially for countries with elevatedsovereign risks. Yet the G20 Debt Service Suspension Initiative did not provide substantial relief toeligible countries, namely, Afghanistan, Maldives, Nepal and Pakistan. Relief stood at less than 20 per
cent of debt service obligations or about 1.6 per cent of GDP, on average.

Figure III.18

Public debt over GDP in select South Asian countries
Percentage
120

100

80

60

40

20

2015

23

ka
an
iL

di
In

an
ki

st

l
pa
Ne

a

Sr

Ba

Source: UN DESA based on IMF,
2021a.
Note: e = estimates.

Pa

ng

la

de

Ira

sh

n

0

2021 eThe United Nations estimated that about 23 million people would be at risk of acute hunger, with 3.2 million
children expected to suffer from malnutrition (IPC, 2021).

CHAPTER III

131

REGIONAL DEVELOPMENTS AND OUTLOOKSInflation is projected to remain largely stable in most economies in South Asia, which offers flexibility
to central banks before they move to more restrictive monetary stances. After inflationary pressures

Inflation prospects
remain largely stable

gained momentum in early 2021 due to supply constraints and rising energy prices, consumer priceinflation has tended to subside. At the aggregate level, it is projected at 8.4 per cent in 2022. In India,
inflation is expected to decelerate throughout 2022, continuing a trend observed since the second
half of 2021 when relatively restrained food prices compensated for higher oil prices. A sudden andrenewed rise in food inflation, however, due to unpredictable weather, broader supply disruptions andhigher agricultural prices, could undermine food security, reduce real incomes and increase hunger
across the region. In the Islamic Republic of Iran, inflation remains elevated due to depreciation of thedomestic currency and the monetization of fiscal deficits.
Monetary policies remain accommodative with interest rates close to record lows and liquidity
measures still in place in most economies. Yet the monetary cycle is gradually shifting as global
financial conditions tighten and the recovery gains steam. The Reserve Bank of India has begun to taper
liquidity by increasing the volume of reverse repo operations and the cash reserve ratio; it is expected
to raise interest rates throughout 2022. The central banks of Pakistan and Sri Lanka increased interest
rates in the second half of 2021 amid rising inflation and widening current account deficits. Central
banks need to assess the magnitude and timing of policy changes to support an inclusive recovery andmaintain financial and price stability.

The monetary cycle isgradually shifting towards
a less accommodative
stance132

Western AsiaWORLD ECONOMIC SITUATION AND PROSPECTS 2022

GDP growth
Percentage
6
4

Total
Per capita

3.5
2.4

1.4

2
0

4.8

4.7

3.1

3.0
0.7

-0.2

-2

1.9

-3.4

-4

-5.0

-6
2018

2019

2020

2021 e2022 f

2023 f

COVID-19 cases & deaths

Vaccination

Per 100,000 people

Percentage of population

as of 20 December 2021

69

World

180

Developed economies

159

Economies in transition

46

Developing economies

3,520
11,282as of 20 December 2021

6,523

57.5
68.1

36.7

74.2

45.6
44.7

55.3

684 17

Africa*708 14

East Asia

36

South Asia

62

Western Asia

8.6

13.2
68.8

76.0

ita

l

ai

sa

ts

ae

ai

sa

nr

et
s

ew

2,101

47.5

6,666

239

7,253

Latin America and the Caribbean**

37.6
13.2

42.8

56.4
48.2
57.9

70.5

ai

sa

ht

uo

s

ac

irf

a

an

2,342

Cases

DeathsPartially vaccinated (at least one dose)

Fully vaccinatedNote: The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations. The map
represents countries and/or territories or parts thereof for which data is available and/or analysed in World Economic Situation and Prospects 2022. The shaded
areas therefore do not necessarily overlap entirely with the delimitation of their frontiers or boundaries. Aggregate data for Africa, excluding Libya.
* Excluding Libya; **Excluding Bolivarian Republic of Venezuela. e: 2021 estimates. f: 2022-2023 forecasts.
Source for COVID-19 data: UN DESA calculations, based on data from Johns Hopkins University.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS133

Western Asia: recovery to continue in 2022•

The slow recovery of crude oil production countered the rapid recovery of domestic demand.

•

Economic sentiment improved in the second half of 2021 with progress on vaccination.

•

A robust recovery is forecast to continue in 2022 with an expected increase in crude oil production.

The Western Asian economies grew an estimated 4.7 per cent in 2021. With the relaxation of pandemic
control measures and the progress of vaccination, economic activities recovered rapidly particularlyin the second half of the year. Strong domestic demand was seen after the substantial plunge in theprevious year, leading recovery in Israel and Turkey. While the unemployment rate declined towards
pre-pandemic trends in Israel, Saudi Arabia and Turkey, the speed of employment recovery has beenslower in other countries. The employment situation is dire in Iraq, Lebanon, the State of Palestine, theSyrian Arab Republic and Yemen.

Figure III.19

Recovery forecast for Western Asia
Percentage
20
15
10
5
0
-5
-10
-15

2023 fey
ite
Em d
ira Ara
te b
s
Ye
m
en

rk
Tu

Un

ria
Sy

an

n

Pa Sta
le te
st o
in f
e
Qa
ta
Sa
r
ud
iA
ra
bi
a

Om

ba

no

it
wa

Le

an
rd

2022 f

Ku

el

Jo

ra

q
Ira

2021 e

Is

n
Ba

hr

ai

-20

Source: UN DESA, based on
projections produced with theWorld Economic Forecasting
Model.
Note: e = estimates, f = forecasts.

134WORLD ECONOMIC SITUATION AND PROSPECTS 2022

GDP growth is modest in
Gulf Cooperation Council
countries due to little
expansion in crude oil
production

Estimated GDP growth in 2021 was modest in major crude oil producers, namely the member countriesof the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United ArabEmirates. Strongly recovering energy prices contributed to overall improved economic sentiment but
production coordination under OPEC24 meant that crude oil production in the GCC countries likely
increased only slightly from 2020. In real terms, the oil sector’s contribution to GDP growth is estimatedas extremely modest relative to the contribution from the rapidly recovering non-oil sector. Iraq isfollowing a similar recovery path although the recovery of its non-oil sector has been more modest.

Recovery has stagnatedin other countries in theregionDespite resilience in 2020, Jordan has seen a slow recovery due to the stagnation of service exports,
namely tourism. The economic situation in Lebanon further deteriorated against a deepening financial
crisis (see box III.4). Ongoing armed conflict has hampered economic recovery in the Syrian Arab
Republic and Yemen.

Box III.4

The anatomy of the Lebanese financial crisis
Lebanon faces an unprecedented economic and financial crisis, with GDP growth contracting by 7.2 percent in 2019 and 37.1 per cent in 2020. While COVID-19, the subsequent loss of tourism revenues andthe devastating Beirut port explosion were major drivers of the downturn, an unravelling financial crisis
is also a significant factor. In March 2020, Prime Minister Hassan Diab announced that Lebanon would
not be able to pay a Eurobond of $1.2 billion. As of November 2021, a new Government, formed after a
year-long political vacuum, is about to restart difficult negotiations with the IMF on debt restructuring
and default.
For almost two decades, Lebanon received huge foreign currency inflows. These primarily comprised
remittances from the very large Lebanese diaspora, which may total 15.4 million people, greatly
outstripping an internal population of 6 million (Pukas, 2018). Lebanon also benefited from its reputation
as a safe haven for savings from war-torn Syria. Inflows were directed to domestic banks, whichbought Eurobonds issued by the Government. In 2019, as the supply of foreign currency significantly
decreased, the Government faced difficulties in financing the debt and maintaining the official
exchange rate. It announced measures to improve liquidity, including taxes on gasoline, tobacco and
VoIP applications. These plans triggered massive social protests dubbed the 17 October Revolution.
The unrest combined with a worsening economic situation to propel a bank run with depositors rushing
to withdraw foreign currency deposits from Lebanese banks. Facing shortages of cash, banks froze
foreign currency deposits on 17 October 2019 and began limiting withdrawals to $1,000 per month.
Withdrawals were halted completely a few months later without any official capital control measure.

24

See OPEC (2021) for details.

CHAPTER III

135

REGIONAL DEVELOPMENTS AND OUTLOOKS

Figure III.4.a

Figure III.4.b

The structure of Lebanese public debt

The composition of Lebanese GDP

Percentage of GDP

Billions of Lebanese pounds, current prices

300

120,000
100,000

250

80,000200

60,00040,000150

20,0000100

Domestic debt

External debt

Source: Lebanon, Ministry of Finance and Central Administrationof Statistics.
Note: e = estimation.

1
20 9
20
e

18

20

17

20

16

20

15

20

14

20

13

20

12

20

11

20

10

20

09

20

08

20

07

20

06

20

20

20

05

Net exports

Household consumption

Investment

Government consumption

Source: Lebanon, Central Administration of Statistics.

The freeze on foreign currency deposits led to the immediate birth of a black market for cash dollars.
Initially, the Central Bank provided importers with currency to finance the huge Lebanese current
account deficit. This meant the black market rate hovered around LBP2,000-2,500 per dollar, with theofficial peg maintained at LBP1,507 per dollar. With dwindling foreign reserves, however, the portfolio
of products financed at the official rate began shrinking. By the beginning of 2021, only medicines,
essential food products, medical equipment and fuel imports were financed at the official rate inever smaller amounts, leading to huge shortages in Lebanese pharmacies and petrol stations. As
of September 2021, the Central Bank announced that it will no longer finance these imports, whichcaused massive price increases. At the same time, the black market exchange rate had risen to almost
LBP21,000 per dollar, meaning the Lebanese pound had lost 93 per cent of its value even as the official
peg was maintained.a These developments spurred inflation to enormous levels of 85 per cent in 2020
and an estimated 128 per cent in 2021.
This situation has several consequences for negotiations on debt restructuring. First, pounddenominated debt has become less of a concern because a default has effectively taken place throughinflation, even though the debt is still officially being repaid. Second, a significant share of Lebanesemarket-issued Eurobonds, which constitute 94 per cent of total foreign debt, is held by local banks
and the Central Bank ($11 billion and $5 billion out of $31.3 billion in outstanding debt, respectively).
This means that a significant haircut in dollar-denominated deposits is inevitable. A question hangsover whether such a solution will be accepted by depositors, even though these deposits have been

18
20

16
20

14
20

12
20

10
20

08

06

20

0

20

20

-40,000

04-20,000

50

GDP

136

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

effectively frozen for more than two years despite some measures to allow small withdrawals inpounds at unfavourable rates (Banque du Liban, 2021).
a As of November 2021, theofficial exchange rate stoodat LBP1,507 per dollar. Threeother officially designatedexchange rates were in place
serving different purposes,
including LBP3,900 per dollar
and LBP12,000 per dollar forbank withdrawals under different
conditions. The Central Bank’s
Sayrafa platform supplied dollars
for importers at a rate thatreached LBP19,000 per dollar.

Another element is that two decades of massive foreign inflows financed huge current account deficits

Authors: Ahmed Moummi and Jan
Gaska, United Nations Economic
and Social Commission forWestern Asia

40 per cent suffer extreme multidimensional poverty (ESCWA, 2021b). Safeguarding them against(figure III.4.2), leading to the overvaluation of the pound and dampening export competitiveness. Amid
minimal investment in public infrastructure and productive sectors and the lack of a 24-hour electricity
supply, restoring the current account balance will be painful, requiring a major wage adjustment. This
problem is especially acute given that the main Lebanese export sectors – tourism and knowledgeintensive services – were severely damaged by the pandemic, on top of the brain drain triggered by the
economic situation.
Due to the toxic combination of the financial crisis, the COVID-19 pandemic and the Beirut blast,
Lebanon’s poverty rate has shot up from 42 per cent in 2019 to 82 per cent in 2021. Among the poor,
further deterioration in dignity and well-being is of primary importance and needs to be taken seriously
in further negotiations with international donors.

In Western Asia, COVID-19 outbreaks were generally contained by the end of 2021, after multiple
surges in cases. Israel and Turkey went through Delta variant outbreaks in the second half of 2021.
Further outbreaks in all countries remain a possibility.

Figure III.20

Vaccination progress in Western Asia (as of 20 December 2021)
Percentage of population

0

20

40

60

United Arab Emirates
Qatar
KuwaitIsraelSaudi Arabia
BahrainTurkeyOman
JordanState of Palestine
Lebanon
Iraq
Syrian Arab Republic
Source: UN DESA, based on datafrom Our World in Data (accessedon 20 December 2021).

Yemen
Fully vaccinatedPartially vaccinated

80

100

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

137

Vaccination programmes progressed quickly in the GCC countries, Israel and Turkey, with more thanhalf of the population having received two shots by October 2021 (figure III.20). In Israel, Turkey andthe United Arab Emirates, additional booster shots were administered in the second half of the year.
Other countries struggled to raise the vaccination rate amid supply constraints and vaccine hesitancy.
Despite these difficulties, vaccination has steadily progressed in Iraq, Jordan, Lebanon and the Stateof Palestine. The vaccination rate is likely extremely low for Syria and Yemen.
In the first half of 2021, COVID-19 outbreaks compelled governments to introduce lockdowns,
curfews, social distancing and mask requirements. Stringent lockdowns of various duration were
implemented in most countries. These measures were eased in the second half of the year, replaced

Pandemic control
measures eased in thesecond half of 2021

by vaccination promotion, including booster shots, and with softer social distancing measures. Border
entry restrictions have also gradually lifted, replaced by COVID-19 test and vaccination requirements,
although Israel temporarily closed its borders due to the emergence of the Omicron variant.
In 2021, recovering energy export prices and tax revenues improved fiscal balances after a sharp
deterioration in the previous fiscal year. Fiscal expenditure growth in 2021 was estimated as moderate,
however, focusing on public health and other essential areas. Governments were obliged to step up
fiscal consolidation in the face of rapidly growing public debt (ESCWA, 2021a). Fiscal expenditure in

Fiscal balances improved
with recovering energy
export prices and tax
revenues

real terms significantly declined in Lebanon and Syria amid high inflation rates.
Efforts to diversify fiscal revenue sources in the GCC countries continued. Oman introduced a value
added tax with a 5 per cent rate in April 2021, with Kuwait and Qatar expected to follow in the near
future. Bahrain, Saudi Arabia and the United Arab Emirates had already introduced a 5 per cent value
added tax in 2016, in accordance with the GCC Common Value Added Tax Agreement. Saudi Arabia
raised the rate to 15 per cent in 2020, and Bahrain is scheduled to raise it to 10 per cent in 2022.
Monetary policy has remained expansionary in the GCC countries, Iraq, Israel, Jordan and Turkey. For
Lebanon and Syria, the monetary stance has resulted in extremely tight financial conditions through a
substantial devaluation of the national currency.
Inflationary pressures have remained weak except in Lebanon, Syria, Turkey and Yemen. The main factor
contributing to high inflation in these countries has been a tight balance-of-payments condition that resulted
in a substantial devaluation of the national currency. Inflation in Lebanon reached an estimated 128 per centin 2021 due to an exchange rate pass through. Inflationary pressure from global supply-chain disruptions

Monetary policy hasremained expansionary
for most countries
Despite global supplychain disruptions,inflation pressuresgenerally remain weakremained weak in Western Asia in 2021 although supply-chain disruptions remain a risk into 2022.
The region’s economy is projected to grow by 4.8 per cent in 2022. The expected expiration of the
OPEC+ crude production coordination in 2022 will allow oil-exporting countries to increase crude oil
production towards pre-pandemic levels. The resumption of international tourism will support further
recovery. Significant downside risks remain from geopolitical tensions and high unemployment, however.
Prolonged conflict in the State of Palestine, Syria and Yemen largely explains uneven recovery in theregion, especially where the economic situation was dire even before the pandemic. High unemployment
rates remain among the region’s most important socioeconomic concerns and need to be resolved.

A robust recovery is
forecast to continue in
2022 amid downside
risks

138

Latin America and the Caribbean
WORLD ECONOMIC SITUATION AND PROSPECTS 2022

GDP growth

6.7

Percentage
6
4
2
0

5.7

1.7

Total
Per capita

2.2

2.5

1.4

1.7

2022 f

2023 f

0.7

0.6

-0.3

-2
-4

-6.8

-6
-8

-7.7
2018

2019

2020

2021 eCOVID-19 cases & deaths

Vaccination

Per 100,000 people

Percentage of population

as of 20 December 2021

69

World

180

Developed economies

159

Economies in transition

46

Developing economies

3,520
11,282as of 20 December 2021

6,523

57.5
68.1

36.7

74.2

45.6
44.7

55.3

684 17

Africa*708 14

East Asia

36

South Asia

62

Western Asia

ita

l

ai

sa

ts

ae

ai

sa

nr

et
s

ew

2,101

47.5

6,666
7,253

239

ai

sa

ht

uo

s

ac

irf

a

an

2,342

Cases

DeathsLatin America
and the Caribbean**

8.6

13.2
68.8
37.6
42.8

76.0

56.4
48.2
57.9

Partially vaccinated (at least one dose)

70.5
Fully vaccinatedNote: The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations. The map
represents countries and/or territories or parts thereof for which data is available and/or analysed in World Economic Situation and Prospects 2022. The shaded
areas therefore do not necessarily overlap entirely with the delimitation of their frontiers or boundaries. Aggregate data for Africa, excluding Libya.
* Excluding Libya; **Excluding Bolivarian Republic of Venezuela. e: 2021 estimates. f: 2022-2023 forecasts.
Source for COVID-19 data: UN DESA calculations, based on data from Johns Hopkins University.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

139

Latin America and the Caribbean: recovery to lose steam
amid fading external tailwinds and policy tightening•

Despite a faster-than-expected rebound in economic activity, the region faces lasting damage
from the pandemic.

•

Governments and central banks are expected to withdraw policy support to address fiscalpressures and combat rapidly rising inflation.

•

The spread of new COVID-19 variants, a sharp tightening of global financial conditions, and socialand political instability pose significant downside risks.

Economies in Latin America and the Caribbean have largely rebounded from the COVID-19-induced
recession, amid favourable external conditions, successful vaccine roll-outs and strong domestic
policy support. But recovery has been insufficient to reverse damage from the pandemic, which has

After a strong recovery
from COVID-19, a
slowdown is looming

pushed millions out of work and into poverty. As global tailwinds recede and structural weaknesses
exacerbated by the pandemic resurface, the region faces the prospect of a sharp economic slowdown,with growth returning to its weak pre-crisis trend. Real GDP expanded by an estimated 6.5 per centin 2021 following the 7.4 per cent contraction in 2020, the region’s deepest pull back in 120 years(Maddison Project Database, 2020). Growth is projected to average only 2.2 per cent in 2022 and 2.5
per cent in 2023. Uncertainties surrounding these forecasts remain exceptionally large as the region
confronts significant downside risks, including the spread of more contagious or deadly COVID-19
variants, a sharp tightening of global financial conditions, and mounting social and political instability.
The region has experienced faster-than-expected but uneven recovery in economic activity over the
past year. The growth rebound in 2021 was partly due to strong base effects, stemming from theoutput collapse at the beginning of the pandemic, but also reflected improved domestic conditions
and supportive external factors. Many countries in Central America and South America recorded highgrowth rates, with annual GDP expanding at double-digit rates in Chile, Panama and Peru. The Caribbean
small island developing States recovered more slowly as fiscal policy was less supportive, due to highlevels of debt, and because they depend on international travel, which resumed only gradually.
The pandemic has loosened its grip as governments, businesses and households have adapted torestrictions, which are having much less of an impact on output than in the early stages of the crisis(Oliveros-Rosen, 2021). The release of pent-up demand has driven higher private consumption andinvestment. With the numbers of daily COVID-19 cases and deaths declining sharply since mid-2021
amid significant progress on vaccination, governments have also more assertively eased restrictions
and reopened economies.25 In about half of the countries, more than 50 per cent of people were fully25

Latin America and the Caribbean’s share of the death toll from COVID-19 is the highest in the world. In midNovember 2021, the region accounted for 30.1 per cent of global deaths from the pandemic while having only 8.4
per cent of the world’s population.

The pandemic hasloosened its grip on theregion’s economy

140

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

vaccinated by the end of November 2021 (figure III.21). Disparities in vaccination rates remain large,
however. In Bermuda, Chile, Cuba and Uruguay, more than 75 per cent of people are fully vaccinatedcompared to less than 20 per cent in Jamaica and under 1 per cent in Haiti.

Figure III.21

Vaccination progress in Latin America and the Caribbean (as of 20 December 2021)
Percentage of population

20

40

60

80

100

Cuba
Chile
Argentina
Uruguay
EcuadorColombia
Brazil
Costa Rica
Peru
PanamaNicaragua
El Salvador
Venezuela, Bolivarian Republic of
Dominican Republic
MexicoBelizeBarbados
GuyanaTrinidad and Tobago
Honduras
Paraguay
Bolivia (Plurinational State of)Suriname
BahamasGuatemalaJamaica
Haiti

Source: UN DESA, based on datafrom Our World in Data (accessedon 20 December 2021).

Favourable external
conditions supported
economic recovery

0

Fully vaccinatedPartially vaccinated

The region has benefited from supportive external conditions. Strong demand from its main trading
partners, notably China, the European Union and the United States, has boosted export growth. The
global recovery has also led to sharp increases in the prices of oil, metals and agricultural goods,
with South America’s commodity exporters recording significant improvements in their terms oftrade (ECLAC, 2021a).26 At the same time, rapid growth in remittance inflows, driven by a recovering
economy in the United States, has supported private demand in Mexico, Central America and parts of26

By contrast, Mexico, Central America and the Caribbean experienced a slight worsening in the terms of trade in
2021.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS141

the Caribbean.27 Total remittance flows to the region reached an estimated record high of $126 billion
in 2021, up 21.6 per cent over 2020 (World Bank, 2021c). Exceptionally accommodative global financial
conditions have allowed governments and businesses across the region to access international
financing on favourable terms.
While South America’s commodity exporters have led the region’s pandemic recovery, their growthprospects for 2022 and 2023 are subdued. Tailwinds from higher commodity prices, buoyant demand
from China and the United States and favourable global financial conditions will gradually fade. At

Fading external tailwinds
and policy tightening
weigh on growth

the same time, central banks are expected to tighten monetary policy to combat rapidly rising
inflationary pressures. Governments will increasingly move away from fiscal stimulus and towards theconsolidation of public finances. Altogether, these factors are expected to lower GDP growth in SouthAmerica to only 1.6 per cent in 2022. Short-term growth prospects are more favourable for Central
America and especially the Caribbean, where the continued resumption of tourism will stimulate
economic activities.
The region’s labour markets have seen only a partial and uneven recovery after suffering an
unprecedented shock during the early stages of the COVID-19 crisis. While economic activity rebounded,job creation has been insufficient in terms of quantity and quality. In most countries, unemployment
rates have remained significantly higher and participation rates lower than before the pandemic (figure
III.22). In addition, informal employment has accounted for a large portion of the jobs created during
the recovery (ILO, 2021b). ECLAC (2021a) warns that unemployment rates may increase even further inthe coming years as people re-enter the labour market. Risks of long-term unemployment are greatest
for groups hit particularly hard by the pandemic, including young people, women and less educatedworkers. Box III.5 examines the pandemic’s disproportionate impact on the employment of vulnerable
groups, underscoring the need to adopt comprehensive macroeconomic and labour market policy
packages.

27

In El Salvador, Guatemala, Honduras and Jamaica, the value of remittances exceeded 18 per cent of GDP in 2021.

Labour market recovery
has been slow anduneven142

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure III.22

Unemployment rates in select Latin American countries
Percentage
18
16
14
12
10
8
6
4
2

Source: CEIC, national data.

Third quarter, 2021

ca

il

Ri
a
st

Br

az
Co

Co

lo

m

bi

a

ru
Pe

ile
Ch

Do
Re mn
pu ica
bl n
ic

M

ex

ic

o

0

Fourth quarter, 2019

Box III.5

Healing from the pandemic: the impact of COVID-19 on labour markets in Latin
America and the Caribbean and policies to promote a transformative recovery
The pandemic triggered an unprecedented crisis in labour markets across Latin American and the
Caribbean. Although the entire global economy was affected in 2020, countries in this region saw
the largest contraction in employment. It declined 3.5 per cent on average around the world but 9 percent in Latin America and the Caribbean. Before the crisis, the region’s pace of employment growth
was already slowing, with 2010-2019 producing the most sluggish growth in the number of employedpeople since 1950.
For various reasons, the crisis weighed most heavily on employed women and the most vulnerablesocial groups, such as young people, migrants and less-educated workers. Between 2019 and 2020,
the number of people in employment fell by almost 25 million, including about 13 million women.
This resulted in a female unemployment rate of 11.9 per cent, up from 9.3 per cent in 2019. The
unemployment rate for men in 2020 was 9.3 per cent compared with 6.9 per cent in 2019. These
unemployment levels would have been higher (15.3 per cent for men and 22.2 per cent for women) if
many workers had not withdrawn from the labour market altogether.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS

143

Figure III.5.a

Latin America and the Caribbean’s labour force participation rate by gender
Percentage
80
70
60
50
40
30
20
10

Men

Total

20
20

15
20

10
20

05
20

00
20

95
19

19

90

0

Women

The crisis prompted a marked decline in labour force participation, especially among women, bringing
an end to more than 30 years of continuous growth. By the close of 2020, women’s participation rate
was similar to that of 2001 (see figure III.5.a). This noticeable impact stems from women’s strong
presence in activities that were highly restricted during the pandemic, such as commerce and tourism,
but also from the greater burden of unpaid work linked to household care for children, older persons
and the sick that typically falls on women and in many cases grew worse during pandemic-related
lockdowns.
Informal employment was heavily affected by the COVID-19 crisis, even as it provided work for nearly
half of the people employed in Latin America and the Caribbean. In contrast to previous crises, informal
employment did not act as a buffer in the labour market but actually fluctuated more than formal
employment, as shown in figure III.5.b.

Source: ECLAC, based on official
national data.

144

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Figure III.5.b

People in formal and informal employment and total employed, first quarter of 2019
to fourth quarter of 2020
A. Brazil

B. Chile

Percentage

Percentage

5

10

0

0

-10
-5
-20
-10

-15

-30

I

II

III

IV

I

II

2019

III

-40

IV

I

II

2020

III

IV

I

2019

C. Colombia

II

III

IV

2020

D. Mexico

Percentage

Percentage

10

10
5

5

0
0

-5

-5

-10
-15

-10

-20
-15
-20
Source: ECLAC, based on official
national data.
Note: Percentage change from thesame quarter of the previous year.

-25
I

II

III

2019

IV

I

II

III

IV

-30

2020
Formal

I

II

III

IV

2019
Informal

I

II

III

IV

2020

Total employed

The 2021 economic recovery boosted employment in the region but for most countries, neither
economic activity nor employment returned to pre-crisis levels. In fact, in 2020, the number of employedpersons fell by 25.3 million, of whom 17.3 million (68 per cent) returned to the labour force in 2021.
This means the number of employed persons in the region was 2.8 per cent lower in 2021 than in 2019.

CHAPTER III

REGIONAL DEVELOPMENTS AND OUTLOOKS145

The total unemployment rate rose to 11 per cent, a rate worse for women at 12.7 per cent, 3 percentage
points higher than the rate for men at 9.7 per cent.
Beyond the rebound in 2021, economic growth is likely to remain sluggish, which will not support rapid
recovery in employment or improvements in the quality of jobs. Policies to drive the creation of highquality jobs will be essential. These should focus on strengthening employment among groups mostaffected during the crisis, including women, young people and migrants. It is also necessary to support
productive sectors with the greatest potential for job creation and labour market formalization, andto advance care systems that modify the traditional gender-based division of labour. Such systems
should enshrine the right to care and the right to be cared for under conditions of quality and equality.
All these steps should be taken in the medium term as the challenges will only grow if the region fails
to break the pattern of weak growth seen before the COVID-19 crisis.
Fiscal stimulus packages to respond to COVID-19, particularly job support measures, have playeda crucial role in protecting households and businesses and boosting aggregate demand. This
support must be maintained in coming years to halt rising inequalities in the region. Furthermore,comprehensive short-term policies should support jobs and productivity and protect the incomesof the most disadvantaged groups, aiming for productive transformation capable of creating andmaintaining high-quality jobs.
This comprehensive vision requires training, public employment programmes, employment subsidies,self-employment and microentrepreneurship programmes, employment services and infrastructure forlabour intermediation, among other core measures.

a

The strong rebound in economic growth in Latin America and the Caribbean has been accompanied by
rapidly rising inflationary pressures. Excluding the Bolivarian Republic of Venezuela, average consumer
price inflation accelerated to an estimated 11.3 per cent in 2021, the fastest annual pace in more thana See United Nations Economic
Commission for Latin America
and the Caribbean (2021a) for
the strategies followed by Latin
American economies to mitigate
the impacts of the crisis andpromote job creation during therecovery. UN Women and United
Nations Economic Commission
for Latin America and the
Caribbean (2021) show theimportance of comprehensive
national care systems to foster
growth and gender equality inthe region.
Author: United Nations Economic
Commission for Latin America andthe Caribbean

Soaring food and energy
prices have pushed
inflation higher

two decades. In October, year-on-year inflation exceeded the central bank target range in all large
economies (Argentina, Brazil, Chile, Colombia, Mexico and Peru). In contrast, upward pressures on
prices have been more limited in most Central American countries. The recent surge in inflation reflects
several factors, which vary in importance by country: the release of pent-up demand as pandemicrelated restrictions have eased; supply shortages, for example, in the electronics, automotive andagricultural industries; higher prices of imported goods and services due to exchange rate depreciation;
and, most importantly, soaring food and energy prices, which make up a larger share of consumer
price indices in Latin America and the Caribbean than in developed countries. The spike in food prices
has particularly affected low-income households, many of which are still reeling from the pandemic.
Medium-term inflation expectations have so far remained well anchored, reflecting improved monetary
policy frameworks and greater central bank credibility in much of the region, even though the growth
outlook for major economies remains weak. In August 2021, three-year-ahead inflation expectations
were below 4 per cent in Brazil, Chile, Colombia, Mexico and Peru (IMF, 2021b). Although core inflation,

Inflation expectations
have so far remained wellanchored146

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

which excludes volatile food and energy prices, has accelerated, most factors pushing prices up arelikely temporary. Food and energy prices are expected to plateau in 2022, while demand pressuresand supply-chain bottlenecks will likely ease gradually in the coming year. A baseline forecast projects
average consumer price inflation in the region to moderate to 9.6 per cent in 2022 and 7.2 per cent in
2023. But large uncertainties surrounding the inflation outlook and concerns over deteriorating growthprospects present monetary policymakers with a challenging environment to navigate.

Several central banks
have tightened monetary
policyAfter providing unprecedented monetary policy support in response to the pandemic, central banks
started to withdraw monetary stimulus in 2021. Many have raised their policy rates, aiming to rein in
inflationary pressures and prevent de-anchoring of inflation expectations (figure III.23). The Central
Bank of Brazil has embarked on the most aggressive tightening cycle in the region, lifting its main
policy rate from 2 per cent at the start of the year to 7.75 per cent in late October and projecting the rate
will reach 9.75 per cent in 2022. Several other central banks, for example, in Chile, Colombia and Peru,
accelerated tightening in late 2021. While the monetary tightening cycle is set to continue in 2022, thequestion is how aggressively central banks will raise borrowing costs. Since current upward pressureis partly due to global and supply-side factors, sharp tightening of monetary policy may not be effective
in reducing inflation and could undermine a fragile and incomplete recovery. If it leads to increased
capital inflows and exchange rate appreciations, it could hurt exports.

Figure III.23

Central bank policy rates in select Latin American countries
Percentage
10
9
8
7
6
5
4
3
2
1
0
Source: Bank for International
Settlements.

2019
BrazilChile

2020
Colombia

Mexico2021
Peru

REGIONAL DEVELOPMENTS AND OUTLOOKS

147

Large-scale fiscal stimulus measures were vital in cushioning social fallout from the pandemic and

Pressures to consolidate
public finances are likely
to riseCHAPTER III

supporting economic recovery in the region. Most governments, with major exceptions being Chileand Peru, started scaling back their extraordinary policy support in 2021 but spending levels remained
significantly higher than before the crisis. At the same time, public revenues recovered through higher
economic growth and rising commodity prices. This temporary cyclical improvement, however, should
not obscure a still challenging fiscal outlook. With global financial conditions expected to tighten,pressures to consolidate public finances are likely to increase, especially for countries with large dollardenominated debt (for example, Argentina and the Dominican Republic). In many countries, fiscal
space will further shrink as the debt-servicing burden continues to rise. Given large and increasing
demands for greater spending, including to strengthen health and education systems, expand social
protection coverage, facilitate energy transition and carry forward policies to support industry andtechnology, additional resource mobilization will remain critical. Above all, this requires increasing
contributions from direct taxes. More progressive taxation, coupled with increased efforts to closeloopholes and combat tax evasion, can put public finances on a more solid footing while reducing
income inequalities (Hanni and others, 2015; Martorano, 2018).

COUNTRY CLASSIFICATIONS

149

Statistical Annex

150

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Country classifications

COUNTRY CLASSIFICATIONS

Data sources, country classifications andaggregation methodology
The statistical annex contains a set of data that the World Economic Situation and Prospects (WESP)
employs to delineate trends in various dimensions of the world economy.

Data sources
The annex was prepared by the Economic Analysis and Policy Division (EAPD) of the Department of
Economic and Social Affairs of the United Nations Secretariat (UN DESA). It is based on information
obtained from the Statistics Division and the Population Division of UN DESA, as well as from thefive United Nations regional commissions, the United Nations Conference on Trade and Development(UNCTAD), the International Monetary Fund (IMF), the World Bank, the Organization for Economic
Cooperation and Development (OECD), Eurostat and national sources. Estimates for 2021 andforecasts for 2022 and 2023 were made by EAPD in consultation with the regional commissions and
UNCTAD, partly guided by the World Economic Forecasting Model (WEFM) of EAPD.1 Longer-term
projections are based on a technical model-based extension of the WEFM. Data presented in the WESP
may differ from those published by other organizations for several reasons, including differencesin timing, sample composition and aggregation methods. Historical data may differ from those inprevious editions of the WESP because of updating and changes in the availability of data for individual
countries.

Country classifications
For analytical purposes, the WESP classifies all countries of the world into one of three broad categories:
developed economies, economies in transition and developing economies.2 The composition of theseanalytical groupings, specified in tables A, B and C, is intended to reflect basic economic country
conditions, and are not strictly aligned with the regional classifications defined by the Statistics
Division of UN DESA known as M49.3 Table A.4 reports estimates for regional GDP growth according to
the M49 definitions for comparison. Several countries (in particular the economies in transition) havecharacteristics that could place them in more than one category; however, for purposes of analysis,
the groupings have been made mutually exclusive. Within each broad category, some subgroups aredefined based either on geographical location or on ad hoc criteria, such as the subgroup of “major
developed economies”, which is based on the membership of the Group of Seven.
In parts of the analysis, a distinction is made between fuel exporters and fuel importers. An economy
is classified as a fuel exporter if the share of fuel exports in its total merchandise exports is greater
1
2
3

See Altshuler et al. (2016).
These analytical groupings are not strictly aligned with geographic groupings of Developed Regions and Developing
Regions designated by the Statistics Division of UN DESA.
Full details of the M49 standard can be found on the Statistics Division website.

151

152

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

than 20 per cent and the level of fuel exports is at least 20 per cent higher than that of the country’s
fuel imports (table D). This criterion is drawn from the share of fuel exports in the total value of world
merchandise trade. Fuels include coal, oil and natural gas.
For other parts of the analysis, countries have been classified by their level of development as measured
by per capita gross national income (GNI). Accordingly, countries have been grouped as high-income,upper-middle-income, lower-middle-income and low-income (table E). To maintain compatibility withsimilar classifications used elsewhere, the threshold levels of GNI per capita are those established by
the World Bank. Countries with less than $1,046 GNI per capita are classified as low-income countries,
those with between $1,046 and $4095 as lower-middle-income countries, those with between $4096
and $12,695 as upper-middle-income countries, and those with incomes of more than $12,695 as highincome countries. GNI per capita in dollar terms is estimated using the World Bank Atlas method,4 andthe classification in table E is based on data for 2020.
The list of the least developed countries (LDCs) is determined by the United Nations Economic andSocial Council and, ultimately, by the General Assembly, on the basis of recommendations made by
the Committee for Development Policy. The basic criteria for inclusion require that certain thresholds
be met with regard to per capita GNI, a human assets index and an economic and environmental
vulnerability index.5 As of February 2021, there were 46 LDCs (table F).
The WESP also makes reference to the group of heavily indebted poor countries (HIPCs), which
are considered by the World Bank and IMF as part of their debt-relief initiative (the Enhanced HIPC
Initiative).6 In March 2020, there were 39 HIPCs (table G).

Aggregation methodology
Aggregate data are either sums or weighted averages of individual country data. Unless otherwise
indicated, multi-year averages of growth rates are expressed as compound annual percentage rates
of change. The convention followed is to omit the base year in a multi-year growth rate. For example,
the 10-year average growth rate for the decade of the 2000s would be identified as the average annual
growth rate for the period from 2001 to 2010.
The WESP utilizes market exchange rate conversions of national data in order to aggregate output ofindividual countries into regional and global totals. The growth of output in each group of countries iscalculated from the sum of gross domestic product (GDP) of individual countries measured at 2015
prices and exchange rates. This method supplies a reasonable set of aggregate growth rates for aperiod of about 15 years, centered on 2015.

4
5
6

See http://data.worldbank.org/about/country-classifications.
Handbook on the Least Developed Country Category: Inclusion, Graduation and Special Support Measures, 4th ed.
(United Nations publication, Sales No. E.22.II.A.1).
International Monetary Fund, Debt Relief Under the Heavily Indebted Poor Countries (HIPC) Initiative.

COUNTRY CLASSIFICATIONS

prices and exchange rates. This method supplies a reasonable set of aggregate growth rates for a153

period of about 15 years, centered on 2015.
The exchange rate-based aggregation method differs from the one mainly applied by the IMF for theirestimates of world and regional economic growth, which is based on purchasing power parity (PPP)
weights. Over the past two decades, the growth of world gross product (WGP) on the basis of theexchange rate-based approach has been below that based on PPP weights. This is because developing
countries, in the aggregate, have seen significantly higher economic growth than the rest of the worldin the 1990s and 2000s and the share in WGP of these countries is larger under PPP measurements
than under market exchange rates. Table I.1 in Chapter I reports world output growth with PPP weights
as a comparator.
Table A

Developed economies
EuropeNorthern America
CanadaUnited States

Developed Asia
and Pacific
AustraliaJapan
New Zealand

European Union
EU-15
Austriaa
Belgiuma
Denmarka
Finlanda
Francea
Germanya
Greecea
Irelanda
ItalyaLuxembourga
Netherlandsa
Portugala
SpainaSwedenOther Europe
Iceland
NorwaySwitzerland
United Kingdomc

Major developed
economies (G7)CanadaFranceGermany
Italy
Japan
United Kingdom
United States

EU-13bBulgaria
Croatia
Cyprusa
Czechia
Estoniaa
Hungary
Latviaa
Lithuaniaa
MaltaaPolandRomania
Slovakiaa
Sloveniaa

Table B

Economies in transition
South-Eastern Europe

Commonwealth of Independent States and Georgiaa

Albania
Bosnia and Herzegovina
Montenegro

Armenia
Azerbaijan
BelarusGeorgiaa
Kazakhstan
Kyrgyzstan

North Macedonia
Serbiaa Member of euro area.
b Used in reference to the 13
countries that joined the EU
since 2004.
c The United Kingdom withdrew
from the EU on 31 January
2020 and is therefore excluded
from all EU aggregations.

Republic of Moldova
Russian Federation
Tajikistan
Turkmenistan
Ukraineb
Uzbekistana Georgia officially left theCommonwealth of Independent
States on 18 August 2009.
However, its performance isdiscussed in the context of
this group of countries forreasons of geographic proximity
and similarities in economic
structure.
b Starting in 2010, data for the
Ukraine excludes the temporarily
occupied territory of theAutonomous Republic of Crimea
and Sevastopol.

154

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table C

Developing economies by regiona
AfricaSouthern Africa

East Asiab

Caribbean

Algeria
Egypt
Libya
Mauritania
Morocco
Sudan
Tunisia

AngolaBotswana
Eswatini
Lesotho
Malawi
Mauritius
Mozambique
NamibiaSouth Africa
ZambiaZimbabwe

Brunei Darussalam
Cambodia
China
Democratic People’s
Republic of Korea
Fiji
Hong Kong SARc
Indonesia
Kiribati
Lao People’s Democratic
Republic
Malaysia
Mongolia
Myanmar
Papua New Guinea
Philippines
Republic of Korea
Samoa
Singapore
Solomon Islands
Taiwan Province of China
Thailand
Timor-Leste
Vanuatu
Viet Nam

BahamasBarbados
BelizeGuyanaJamaica
Suriname
Trinidad and Tobago

Cameroon
Central African
Republic
Chad
Congo
Equatorial Guinea
Gabon
Sao Tome andPrinicipe
East Africa
BurundiComoros
Democratic
Republic of theCongo
Djibouti
Eritrea
Ethiopia
Kenya
Madagascar
RwandaSomaliaSouth Sudan
UgandaUnited Republicof Tanzania

monitored for the World
Economic Situation and
Prospects report. These
analytical groupings differ
from the geographicalaggregations definedaccording to M49.
b Throughout the report the term
‘East Asia’ is used in reference tothis set of developing countries,and excludes Japan.
c Special Administrative
Region of China.

Latin America
and the Caribbean

North Africa

Central Africaa Economies systematically

Asia

West Africa
Benin
Burkina Faso
Cabo Verde
Côte d’Ivoire
GambiaGhana
GuineaGuinea-Bissau
Liberia
Mali
Niger
Nigeria
SenegalSierra Leone
Togo

South Asia
Afghanistan
Bangladesh
BhutanIndia
Iran (Islamic Republic of)
Maldives
Nepal
Pakistan
Sri Lanka
Western Asia
Bahrain
Iraq
IsraelJordanKuwaitLebanonOman
Qatar
Saudi Arabia
State of Palestine
Syrian Arab RepublicTurkeyUnited Arab Emirates
Yemen

Mexico and Central
America
Costa Rica
Cuba
Dominican Republic
El Salvador
GuatemalaHaiti
Honduras
MexicoNicaragua
PanamaSouth America
Argentina
Bolivia (Plurinational
State of)BrazilChile
Colombia
EcuadorParaguay
Peru
Uruguay
Venezuela (Bolivarian
Republic of)

COUNTRY CLASSIFICATIONS

155

Table D

Fuel-exporting countries
Developing countries
Developed
countries
NorwayEconomiesin transition
Azerbaijan
Kazakhstan
RussianFederation
Turkmenistan

Latin America
and theCaribbean

AfricaBolivia
Algeria(Plurinational Angola
State of)Cameroon
Colombia
Chad
EcuadorCongo
Trinidad andEquatorial
TobagoGuineaVenezuela
Gabon(Bolivarian
Republic of) Ghana
Libya
Mozambique
Nigeria

East Asia

Western Asia

BruneiBahrain
Darussalam Iraq
Indonesia
KuwaitMongolia

Papua New
GuineaOman
Qatar
Saudi Arabia
United ArabEmiratesSouth Asia

Yemen

Iran (Islamic
Republic of)Source: UN DESA, based on datafrom UNCTAD.

156

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table E

Economies by per capita GNI as of 1 July 2021a
High-income
Australia
Austria
BahamasBahrainBarbados
Belgium
Brunei
Darussalam
CanadaChile
Croatia
CyprusCzechia
Denmark
Estonia
FinlandFranceGermany
GreeceHong Kong SARd
Hungary
Iceland
IrelandIsraelItaly
Japan
KuwaitLatviaLithuania
Luxembourg
Malta
Netherlands
New Zealand
NorwayOman
PolandPortugal
Qatar
Republic of Korea
Saudi Arabia
Singapore
Slovakia
Slovenia
Spain
SwedenSwitzerland
Taiwan Province of
China
Trinidad and Tobago
United Arab Emirates
United Kingdom
United States
UruguayUpper-middle-income
Albania
Argentina
Armenia
Azerbaijan
BelarusBosnia andHerzegovina
Botswana
BrazilBulgaria
China
Colombia
Costa Rica
Cuba
Dominican Republic
EcuadorEquatorial Guinea
Fiji
Gabon
Georgia
Guatemala
GuyanaIraq
Jamaica

Lower-middle-income

JordanKazakhstan
Lebanon
Libya
Malaysia
Maldives
Mauritiusb
MexicoMontenegro
Namibia
North Macedonia
PanamabParaguay
Peru
Republic of Moldova
Romaniab
Russian Federation
SerbiaSouth Africa
SurinameThailandTurkeyTurkmenistan

Algeria
AngolaBangladesh
Belizeb
Benin
BhutanBolivia(Plurinational
State of)Cabo VerdeCambodia
Cameroon
Comoros
Congo
Côte d’Ivoire
Djibouti
Egypt
El Salvador
Eswatini
Ghana
HaiticHonduras
India
Indonesiab
Iran (Islamic
Republic of)b
Kenya
Kiribati
Kyrgyzstan
Lao People’s
Democratic
Republic

Lesotho
Mauritania
Mongolia
MoroccoMyanmar
Nepal
Nicaragua
Nigeria
PakistanPapua New Guinea
Philippines
Samoab
Sao Tome andPrincipe
SenegalSolomon Islands
Sri Lanka
State of Palestine
Tajikistanc
Timor-Leste
Tunisia
UkraineUnited Republic of
Tanzania
Uzbekistan
Vanuatu
Viet Nam
ZambiaZimbabwe

Low-income
Afghanistan
Burkina Faso
BurundiCentral African
Republic
Chad
Democratic People’s
Republic of Korea

Democratic Republicof the Congo
Eritrea
Ethiopia
GambiaGuineaGuinea-Bissau
Liberia

Madagascar
Malawi
Mali
Mozambique
Niger
RwandaSierra Leone
SomaliaSouth Sudan

Sudan
Syrian Arab
Republic
Togo
UgandaYemen

Source: World Bank, Country classification by income (https://datahelpdesk.worldbank.org/knowledgebase/articles/906519).
Note: Venezuela (Bolivarian Republic of) has been temporarily unclassified in July 2021 pending release of revised national accounts statistics.
a Economies systematically monitored for the World Economic Situation and Prospects report, based on World Bank country classifications by income.
b Indicates the country has been shifted downward by one category from previous year’s classification.
c Indicates the country has been shifted upward by one category from previous year’s classification.
d Special Administrative Region of China.

157

COUNTRY CLASSIFICATIONS

Table F

Least developed countries (24 November 2021)
AfricaAngolaBenin
Burkina Faso
BurundiCentral African Republic
Chad
Comoros
Democratic Republic of
the Congo
Djibouti
Eritrea
Ethiopia
GambiaGuineaGuinea-Bissau
LesothoLiberia
Madagascar

MalawiMali
Mauritania
Mozambique
Niger
Rwanda
Sao Tome and Principe
SenegalSierra Leone
SomaliaSouth Sudan
Sudan
Togo
UgandaUnited Republicof Tanzania
ZambiaEast Asia

South Asia

Cambodia
Kiribati
Lao People’s
Democratic
Republic
Myanmar
SolomonIslands
Timor Leste
Tuvalua

Afghanistan
Bangladesh
Bhutan
Nepal

Western Asia

Latin America
and the Caribbean

Yemen

Haiti

Developed country
central banks
massively expanded
their balance sheets

Source: UN DESA (https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/ldc_list.pdf).
a Economies not systematically monitored for the World Economic Situation and Prospects report.

Table G

Heavily indebted poor countries (as of March 2020)
Post-completion point HIPCsa
Afghanistan
Benin
Bolivia
Burkina Faso
BurundiCameroon
Central African Republic
Chad
Comoros
Congo
Côte D’Ivoire
Democratic Republic of the Congo
Ethiopia
GambiaGhana
GuineaGuinea-Bissau
GuyanaHaiti
Honduras
Liberia
Madagascar
MalawiMali
Mauritania
Mozambique
Nicaragua
Niger
Rwanda
Sao Tome and Principe
SenegalSierra Leone
Somalia
Togo
UgandaUnited Republic of Tanzania
ZambiaPre-decision point HIPCsb
Eritrea
Sudan

Source: The World Bank and the International Monetary Fund (https://www.worldbank.org/en/topic/debt/brief/hipc).
a Countries that have qualified for irrevocable debt relief under the HIPC Initiative.
b Countries that are potentially eligible and may wish to avail themselves of the HIPC Initiative or the Multilateral Debt Relief Initiative (MDRI).

158

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table H

Small island developing States
United Nations members
Antigua and Barbudaa

Marshall Islandsa

Bahamas

Mauritius

Bahrain

NauruaBarbadosPalauaBelizePapua New Guinea

Cabo VerdeSaint Kitts and Nevisa

Comoros

Saint Luciaa

Cuba

Saint Vincent and
the Grenadinesa

Dominicaa

Source: UN DESA (https://sustainabledevelopment.
un.org/topics/sids/list).
a Economies not systematicallymonitored for the World
Economic Situation and
Prospects report.

Dominican Republic

Samoa

Federated Statesof Micronesiaa

Sao Tome and Príncipe
Seychellesa

Fiji

Singapore

Grenadaa

Solomon Islands

Guinea-Bissau

Suriname

GuyanaTimor-Leste

Haiti

TongaaJamaica

Trinidad and Tobago

Kiribati

Tuvalua

Maldives

Vanuatu

Non-UN members/Associate membersof the Regional Commissionsa
American Samoa
Anguilla
Aruba
BermudaBritish Virgin Islands
Cayman Islands
Commonwealth ofNorthern Marianas
Cook Islands
Curaçao
French Polynesia
Guadeloupe
Guam
MartiniqueMontserrat
New Caledonia
Niue
Puerto RicoSint Maarten
Turks and Caicos Islands
U.S. Virgin Islands

Table I
Landlocked developing countries
Landlocked developing countries

Source: UN-OHRLLS (http://
unohrlls.org/about-lldcs/
country-profiles/).

Afghanistan

Ethiopia

North Macedonia

Armenia

Kazakhstan

Paraguay

Azerbaijan

Kyrgystan

Republic of Moldova

BhutanRwandaBolivia (Plurinational State of)

Lao People’s Democratic
Republic

Botswana

LesothoTajikistan

Burkina Faso

MalawiTurkmenistan

BurundiMali

UgandaCentral African Republic

Mongolia

Uzbekistan

Chad

Nepal

ZambiaEswatini

Niger

Zimbabwe

South Sudan

159

COUNTRY CLASSIFICATIONS

Table J

International Organization for Standardization of Country Codes
ISO
Code
AFG
AGO
AIA
ALB
AND
ARE
ARG
ARM
ATG
AUS
AUT
AZE
BDI
BEL
BEN
BFA
BGD
BGR
BHR
BHS
BIH
BLR
BLZ
BOL
BRA
BRB
BRN
BTN
BWA
CAF
CAN
CHE
CHL
CHN
CIV
CMR
COD
COG
COL
COM
CPV
CRI
CUB
CYP
CZE
DEU
DJI
DMA
DNK
DOM

Country
Afghanistan
AngolaAnguilla
Albania
AndorraUnited Arab Emirates
Argentina
Armenia
Antigua and Barbuda
Australia
Austria
Azerbaijan
BurundiBelgium
Benin
Burkina Faso
Bangladesh
Bulgaria
Bahrain
BahamasBosnia andHerzegovina
Belarus
BelizeBolivia (Plurinational
State of)BrazilBarbados
Brunei Darussalam
BhutanBotswana
Central African
Republic
CanadaSwitzerland
Chile
China
Côte D’Ivoire
Cameroon
Democratic Republicof the Congo
Congo
Colombia
Comoros
Cabo Verde
Costa Rica
Cuba
CyprusCzechia
Germany
Djibouti
Dominica
Denmark
Dominican Republic

ISO
Code
DZA
ECU
EGY
ERI
ESP
EST
ETH
FIN
FJI
FRA
FSM
GAB
GBR
GEO
GHA
GIN
GMB
GNB
GNQ
GRC
GRD
GTM
GUY
HND
HRV
HTI
HUN
IDN
IND
IRL
IRN
IRQ
ISL
ISR
ITA
JAM
JOR
JPN
KAZ
KEN
KGZ
KHM
KIR
KNA
KOR
KWT
LAO

Country
Algeria
Ecuador
Egypt
Eritrea
Spain
Estonia
Ethiopia
FinlandFiji
FranceMicronesia(Federated States
of)
Gabon
United Kingdom ofGreat Britain andNorthern Ireland
Georgia
Ghana
GuineaGambiaGuinea-Bissau
Equatorial Guinea
GreeceGrenadaGuatemala
GuyanaHonduras
Croatia
Haiti
Hungary
Indonesia
India
Ireland
Iran (Islamic
Republic of)
Iraq
IcelandIsraelItaly
Jamaica
JordanJapan
Kazakhstan
Kenya
Kyrgyzstan
Cambodia
Kiribati
Saint Kitts and Nevis
Republic of Korea
KuwaitLao People’s
Democratic
Republic

ISO
Code
LBN
LBR
LBY
LCA
LIE
LKA
LSO
LTU
LUX
LVA
MAR
MCO
MDA
MDG
MDV
MEX
MHL
MKD
MLI
MLT
MMR
MNE
MNG
MOZ
MRT
MSR
MUS
MWI
MYS
NAM
NER
NGA
NIC
NLD
NOR
NPL
NRU
NZL
OMN
PAK
PAN
PER
PHL
PLW
PNG
POL
PRK
PRT
PRY
PSE
QAT

Country
Lebanon
Liberia
Libya
Saint Lucia
Liechtenstein
Sri Lanka
Lesotho
Lithuania
Luxembourg
LatviaMoroccoMonacoRepublic of Moldova
Madagascar
Maldives
MexicoMarshall Islands
North Macedonia
Mali
Malta
MyanmarMontenegro
Mongolia
Mozambique
Mauritania
Montserrat
Mauritius
MalawiMalaysia
Namibia
Niger
Nigeria
Nicaragua
Netherlands
NorwayNepal
Nauru
New Zealand
Oman
Pakistan
PanamaPeru
Philippines
Palau
Papua New Guinea
PolandDemocratic People’s
Republic of Korea
Portugal
Paraguay
State of Palestine
Qatar

ISO
Code
ROU
RUS
RWA
SAU
SDN
SEN
SGP
SLB
SLE
SLV
SMR
SOM
SRB
SSD
STP
SUR
SVK
SVN
SWE
SWZ
SYC
SYR
TCD
TGO
THA
TJK
TKM
TLS
TON
TTO
TUN
TUR
TUV
TZA
UGA
UKR
URY
USA
UZB
VCT
VEN
VNM
VUT
WSM
YEM
ZAF
ZMB
ZWE

Country
Romania
Russian Federation
RwandaSaudi Arabia
Sudan
SenegalSingapore
Solomon Islands
Sierra Leone
El Salvador
San Marino
Somalia
SerbiaSouth Sudan
Sao Tome andPrincipe
Suriname
Slovakia
Slovenia
SwedenEswatini
Seychelles
Syrian Arab Republic
Chad
Togo
ThailandTajikistan
Turkmenistan
Timor-Leste
Tonga
Trinidad and Tobago
Tunisia
TurkeyTuvaluUnited Republic of
Tanzania
UgandaUkraineUruguay
United States ofAmericaUzbekistan
Saint Vincent and the
Grenadines
Venezuela (Bolivarian
Republic of)Viet Nam
Vanuatu
Samoa
YemenSouth Africa
ZambiaZimbabwe

Annex tables

163

ANNEX TABLES

Table A.1

Developed economies: rates of growth of real GDP
Annual percentage change

Developed economies
United States
CanadaJapan
Australia
New Zealand
European Union
Austria
Belgium
Bulgaria
Croatia
CyprusCzechia
Denmark
Estonia
FinlandFranceGermany
GreeceHungary
IrelandItaly
LatviaLithuania
Luxembourg
Malta
Netherlands
PolandPortugal
Romania
Slovakia
Slovenia
Spain
SwedenOther Europe
Iceland
NorwaySwitzerland
United Kingdomd
Memorandum items:
Northern America
Developed Asia and the Pacific
EuropeMajor developed economies
Euro area

1999–2013a

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

1.8
2.1
2.4
0.8
3.1
2.8
1.4
1.7
1.8
2.9
1.6
2.3
2.5
1.1
3.7
1.9
1.5
1.2
0.2
2.1
3.3
0.3
3.9
4.0
3.3
2.8
1.5
3.7
0.5
3.5
3.7
2.2
1.7
2.3
1.9
2.9
1.7
2.0
1.8

1.9
2.3
2.9
0.3
2.5
3.3
1.6
0.7
1.6
1.9
-0.3
-1.8
2.3
1.6
3.0
-0.4
1.0
2.2
0.7
4.2
8.7
0.0
1.1
3.5
4.3
7.6
1.4
3.4
0.8
3.6
2.6
2.8
1.4
2.7
2.7
1.7
2.0
2.4
2.9

2.3
2.7
0.7
1.6
2.3
4.2
2.3
1.0
2.0
4.0
2.4
3.2
5.4
2.3
1.9
0.5
1.1
1.5
-0.4
3.8
25.2
0.8
4.0
2.0
4.3
9.6
2.0
4.2
1.8
3.0
4.8
2.2
3.8
4.5
2.2
4.4
2.0
1.7
2.4

1.7
1.7
1.0
0.8
2.7
4.2
2.0
2.0
1.3
3.8
3.5
6.4
2.5
3.2
3.2
2.8
1.1
2.2
-0.5
2.1
2.0
1.3
2.4
2.5
4.6
3.8
2.2
3.1
2.0
4.7
2.1
3.2
3.0
2.1
1.7
6.3
1.1
2.0
1.7

2.4
2.3
3.0
1.7
2.4
4.0
2.8
2.4
1.6
3.5
3.4
5.2
5.2
2.8
5.8
3.2
2.3
2.7
1.3
4.3
8.9
1.7
3.3
4.3
1.8
11.0
2.9
4.8
3.5
7.3
3.0
4.8
3.0
2.6
1.8
4.2
2.3
1.6
1.7

2.3
2.9
2.4
0.6
2.9
4.3
2.1
2.6
1.8
3.1
2.8
5.2
3.2
2.0
4.1
1.1
1.9
1.1
1.6
5.4
9.0
0.9
4.0
3.9
3.1
6.1
2.4
5.4
2.8
4.5
3.7
4.4
2.4
2.0
1.5
4.9
1.1
2.9
1.3

1.8
2.3
1.9
0.0
1.9
3.0
1.8
1.4
1.8
3.7
2.9
3.1
3.0
2.1
4.1
1.3
1.8
1.1
1.9
4.6
4.9
0.3
2.0
4.3
2.3
5.7
2.0
4.7
2.5
4.1
2.5
3.3
2.0
2.0
1.3
2.4
0.9
1.2
1.4

-4.8
-3.4
-5.3
-4.6
-2.5
-1.2
-6.0
-6.3
-6.3
-4.2
-8.0
-5.1
-5.8
-2.1
-3.0
-2.9
-7.9
-4.9
-8.2
-5.0
5.9
-8.9
-3.6
-0.9
-1.3
-7.8
-3.8
-2.7
-7.6
-3.9
-4.8
-4.2
-10.8
-2.8
-7.7
-6.5
-0.8
-2.4
-9.8

4.8
5.5
5.1
2.2
3.1
4.3
4.7
4.5
5.2
4.3
7.8
3.1
3.6
3.5
6.8
3.2
6.0
2.5
8.0
6.8
12.0
6.0
4.3
4.2
5.0
5.2
3.9
5.0
4.2
7.1
4.5
5.6
4.5
4.2
5.4
3.5
3.0
3.6
6.2

3.7
3.5
3.9
3.3
4.2
3.3
3.9
4.0
3.2
4.0
4.3
3.5
3.5
3.3
3.5
2.5
3.6
3.9
5.0
4.3
5.2
4.2
4.4
3.5
2.9
5.2
3.0
4.0
4.8
4.2
3.5
4.0
5.2
3.0
4.0
4.5
3.0
2.7
4.5

2.5
2.4
2.7
2.7
3.0
3.3
2.6
2.0
1.8
3.5
3.3
3.5
2.9
2.9
3.5
2.5
2.5
2.1
3.9
4.2
4.0
2.6
4.5
3.8
2.0
3.0
2.0
4.5
3.1
3.9
3.8
3.9
3.0
2.0
2.1
3.6
2.6
2.3
2.0

2.1
1.3
1.5
1.7
1.3

2.3
0.9
1.6
1.9
1.4

2.5
1.8
2.3
2.1
2.1

1.6
1.3
2.0
1.5
1.9

2.3
1.9
2.8
2.2
2.6

2.9
1.2
2.1
2.1
1.9

2.3
0.5
1.7
1.7
1.5

-3.6
-4.0
-5.7
-4.9
-6.5

5.5
2.5
4.6
4.9
4.7

3.5
3.5
3.8
3.7
4.0

2.4
2.8
2.6
2.4
2.5

Source: UN DESA, based on data of the United Nations Statistics Division and individual national sources.
Note: Regional aggregates calculated at 2015 prices and exchange rates.
a Average percentage change.
b Partly estimated.
c Baseline scenario forecasts, based on UN DESA World Economic Forecasting Model.
d The United Kingdom withdrew from the EU on 31 January 2020 and is therefore excluded from all EU aggregations.

164

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.2

Economies in transition: rates of growth of real GDP
Annual percentage change

1999–2013a

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

Economies in transition

5.2

1.2

-1.2

0.8

2.4

3.2

2.7

-2.6

4.4

3.2

2.9

South-Eastern Europe
Albania
Bosnia and Herzegovina
Montenegro
North Macedonia
SerbiaCommonwealth of Independent Statesand Georgiad
Commonwealth of Independent Statesand Georgia –net fuel exporters
Azerbaijan
Kazakhstan
Russian Federation
Turkmenistan

3.4
5.3
3.5
2.8
2.9
3.1

0.2
1.8
1.2
1.8
3.6
-1.6

2.4
2.2
3.1
3.4
3.9
1.8

3.2
3.3
3.1
2.9
2.8
3.3

2.6
3.8
3.2
4.7
1.1
2.1

4.1
4.1
3.7
5.1
2.9
4.5

3.5
2.2
2.8
4.1
3.2
4.2

-3.1
-3.3
-4.3
-15.3
-4.5
-1.0

6.2
6.8
5.6
10.3
4.4
6.4

4.0
5.0
3.3
5.2
3.9
4.0

3.6
3.8
3.7
3.8
3.5
3.5

5.3

1.2

-1.4

0.7

2.4

3.2

2.6

-2.6

4.3

3.2

2.8

5.3
11.4
7.5
4.9
9.0

1.4
2.8
4.2
0.7
10.3

-1.3
1.0
1.2
-2.0
6.5

0.3
-3.1
1.1
0.2
6.2

2.2
0.2
4.1
1.8
6.5

3.0
1.5
4.1
2.8
6.2

2.4
2.2
4.5
2.0
3.0

-2.7
-4.3
-2.6
-3.0
5.9

4.2
4.9
3.6
4.2
6.1

3.0
4.0
4.0
2.7
5.7

2.7
4.1
4.0
2.3
6.0

Commonwealth of Independent Statesand Georgia –net fuel importers
Armenia
BelarusGeorgiad
Kyrgyzstan
Republic of Moldova
Tajikistan
Ukraine e
Uzbekistan

5.0
7.0
6.1
5.6
4.4
4.3
7.3
3.4
6.7

0.4
3.6
1.7
4.4
4.0
5.0
6.7
-6.6
7.2

-1.8
3.2
-3.8
3.0
3.9
-0.3
6.0
-9.8
7.4

2.7
0.2
-2.5
2.9
4.3
4.4
6.9
2.4
6.1

3.8
7.5
2.5
4.8
4.7
4.7
12.7
2.5
4.5

4.3
5.2
3.2
4.8
3.8
4.3
7.1
3.4
5.4

4.0
7.6
1.2
5.1
4.5
3.5
7.5
3.2
5.6

-1.8
-7.6
-0.9
-6.2
-8.6
-7.0
4.5
-4.0
1.6

4.7
5.2
2.9
9.5
1.5
6.5
6.0
3.2
6.2

4.2
4.4
1.8
4.4
3.5
4.0
4.0
4.0
5.6

3.6
4.0
2.1
4.0
4.0
3.5
3.4
3.8
4.0

Source: UN DESA, based on data of the United Nations Statistics Division and individual national sources.
Note: Regional aggregates calculated at 2015 prices and exchange rates.
a Average percentage change.
b Partly estimated.
c Baseline scenario forecasts, based in part on the UN DESA World Economic Forecasting Model.
d Georgia officially left the Commonwealth of Independent States on 18 August 2009. However, its performance is discussed in the context of this group of countries
for reasons of geographic proximity and similarities in economic structure.
e Data for the Ukraine excludes the temporarily occupied territory of the Autonomous Republic of Crimea and Sevastopol.

165

ANNEX TABLES

Table A.3

Developing economies: rates of growth of real GDP
Annual percentage change

Developing countriesd
AfricaNorth Africa
AlgeriaEgypte
Libya
Mauritania
MoroccoSudaneTunisia
East Africa
BurundiComoros
Democratic Republic of the Congo
Djibouti
Eritrea
Ethiopia
Kenya
Madagascar
RwandaSomaliaSouth Sudan
UgandaUnited Republic of Tanzania
Central Africa
Cameroon
Central African Republic
Chad
Congo
Equatorial Guinea
Gabon
Sao Tome and Principe
West Africa
Benin
Burkina Faso
Cabo Verde
Côte D’Ivoire
GambiaGhana
GuineaGuinea-Bissau
Liberia
Mali
Niger
Nigeria
Senegal

1999–2013a

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

5.7
4.6
3.5
3.6
4.5
-2.0
3.4
4.7
6.2

4.7
3.3
-0.9
3.8
2.9
-50.1
4.3
2.7
7.0

4.4
2.8
2.0
3.7
4.4
-45.5
5.4
4.5
4.0

4.2
1.7
2.9
3.2
4.3
-16.1
1.3
1.1
3.6

4.7
3.3
4.8
1.3
4.2
64.0
3.5
4.2
4.7

4.4
3.4
4.2
1.2
5.3
17.9
2.1
3.1
2.8

3.5
2.8
2.9
0.8
5.1
9.9
5.9
2.6
-2.2

-1.6
-3.0
-4.6
-5.1
2.5
-62.1
-2.9
-6.3
-1.1

6.4
4.7
7.6
3.8
3.3
198.0
3.1
6.1
0.7

4.5
4.0
4.9
4.7
5.9
8.8
3.8
3.5
2.5

4.7
3.7
3.1
3.3
3.9
9.2
5.2
3.1
3.8

3.8
5.5
2.9
2.4
3.8
7.1
0.9
8.8
4.2
2.8
8.2
2.9
1.8
6.9
6.3
4.7
4.1
-0.8
8.1
4.6
13.0
1.1
4.5
6.2
5.5
5.7
5.1
3.2
3.2
6.4
3.5
3.1
7.8
9.0
4.4
6.7
4.0

2.9
7.8
4.2
3.9
9.5
7.1
30.9
10.3
5.4
3.3
6.2
3.7
30.3
4.5
6.7
4.2
5.9
0.1
3.8
6.0
0.4
4.3
6.5
6.5
13.1
4.3
0.6
14.8
-1.4
2.9
3.7
1.0
5.2
7.8
7.5
6.3
4.1

1.2
6.5
-0.4
2.0
6.9
7.7
-20.6
9.0
5.7
3.1
8.9
2.7
7.9
5.7
6.2
1.3
5.7
4.3
4.6
-3.2
-9.1
3.9
3.9
3.7
13.0
3.9
1.0
14.9
4.1
2.2
3.8
6.1
9.3
7.5
4.3
2.7
6.4

1.2
5.5
3.2
2.8
2.4
6.7
7.4
8.5
5.9
4.0
6.0
2.9
-7.0
2.6
6.9
-1.0
4.6
4.8
-2.7
-10.2
-8.8
2.1
4.2
0.4
3.3
6.0
4.7
7.2
1.9
3.4
10.8
6.3
-0.5
8.9
5.7
-1.6
6.4

1.9
5.7
3.8
5.6
3.7
5.4
-10.0
8.2
4.8
3.9
4.0
1.4
-3.7
7.1
6.8
-0.2
3.5
4.5
-2.4
-4.6
-5.7
0.5
3.8
2.6
5.7
6.2
3.7
7.4
4.8
8.1
10.3
5.9
2.5
6.7
5.0
0.8
7.4

2.7
6.6
5.3
3.8
5.8
8.4
13.0
7.6
6.3
3.2
8.6
2.8
3.8
5.7
7.0
0.6
4.1
3.8
2.3
-6.2
-6.4
1.2
2.9
3.3
6.7
6.7
4.5
6.9
7.7
6.3
6.2
3.4
1.2
6.8
7.0
1.9
6.4

1.0
6.6
4.5
2.0
4.4
6.6
3.8
8.9
5.4
4.4
9.4
2.9
0.9
7.7
7.0
1.9
3.9
3.0
3.0
-0.9
-5.6
3.6
1.3
3.4
6.9
5.7
5.7
6.2
6.1
6.5
5.6
4.5
-2.3
6.6
5.8
2.2
5.2

-8.8
1.3
-0.3
0.2
0.8
1.2
-1.8
3.5
-0.3
-4.2
-3.4
-0.7
-7.2
-0.8
4.8
-2.4
-1.5
1.0
-0.9
-7.5
-4.9
-1.7
2.9
-0.8
3.8
1.9
-14.8
2.0
-0.2
0.4
7.1
-1.4
-3.0
-1.6
3.6
-1.8
1.5

3.8
4.0
2.9
2.0
3.5
5.1
1.5
3.5
4.7
3.4
4.5
1.1
2.0
3.9
4.5
2.0
3.4
0.0
1.5
-1.6
1.9
1.5
2.5
3.2
3.9
5.0
3.8
6.2
4.8
4.2
5.2
2.6
2.9
3.0
4.6
2.5
4.8

6.2
4.8
3.5
3.5
4.5
5.9
2.5
4.9
5.0
4.4
6.2
2.0
2.2
4.7
4.8
3.3
4.1
4.1
3.6
3.3
-0.6
3.7
3.6
3.7
5.1
5.5
5.0
6.7
5.3
4.8
6.4
3.6
4.1
4.3
7.1
2.8
6.0

3.2
5.7
3.2
3.6
5.9
6.5
2.1
7.0
4.8
4.6
6.5
3.6
8.9
4.6
5.4
3.5
4.6
4.7
3.8
3.0
-0.7
3.5
3.8
4.0
5.5
5.3
5.1
6.6
5.8
4.3
6.0
4.4
4.5
4.2
9.9
3.0
9.6

166

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.3

Developing economies: rates of growth of real GDP (continued)
Annual percentage change

Sierra Leone
Togo
Southern Africa
AngolaBotswana
Eswatini
Lesotho
Malawi
Mauritius
Mozambique
NamibiaSouth Africa
ZambiaZimbabwe
Africa - net fuel exporters
Africa - net fuel importers
East and South Asia
East Asia
Brunei Darussalam
Cambodia
China
Democratic People’s Republic of Korea
Fiji
Hong Kong SAR f
Indonesia
Kiribati
Lao People's Democratic Republic
Malaysia
Mongolia
Myanmare
Papua New Guinea
Philippines
Republic of Korea
Samoa
Singapore
Solomon Islands
Taiwan, Province of China
Thailand
Timor-Leste
Vanuatu
Viet NamSouth Asia
Afghanistane
Bangladeshe
BhutanIndiae1999–2013a

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

8.3
3.9
4.3
7.3
4.9
3.2
4.1
4.1
4.1
7.6
4.6
3.3
6.7
3.3
4.9
4.4
7.4
7.8
1.5
8.2
9.8
1.4
2.1
4.0
5.0
1.4
7.3
5.1
7.3
11.0
3.1
4.8
5.1
2.5
5.9
3.1
4.2
4.4
1.6
2.9
6.4
5.6
7.8
5.8
7.9
6.5

4.6
11.3
3.0
4.8
4.1
0.9
1.7
6.2
3.7
7.4
6.1
1.8
4.7
2.4
1.4
4.6
6.3
6.3
-2.5
7.1
7.4
1.0
27.5
2.8
5.0
-0.6
7.6
6.0
7.9
7.5
13.5
6.1
3.2
2.6
3.9
1.0
4.7
1.0
4.5
2.3
6.0
6.3
3.1
6.1
4.0
7.4

-20.5
11.1
1.5
0.9
-1.7
2.3
3.1
3.3
3.6
6.7
4.3
1.2
2.9
1.8
0.9
4.2
6.0
6.0
-0.4
7.0
7.0
-1.1
4.7
2.4
4.9
10.3
7.3
5.1
2.4
6.4
6.6
6.1
3.1
6.7
3.0
1.4
1.5
3.1
2.9
0.2
6.7
6.3
-1.4
6.6
6.6
8.0

6.3
10.9
0.2
-2.6
4.3
1.3
3.6
2.7
3.8
3.8
0.0
0.4
3.8
0.8
-0.8
3.4
6.2
5.9
-2.5
6.9
6.8
3.9
2.5
2.2
5.0
1.1
7.0
4.4
2.0
5.8
5.5
6.9
3.0
3.7
3.2
5.9
2.2
3.4
3.4
3.5
6.2
8.0
1.7
7.1
8.1
8.3

3.8
4.3
1.4
-0.1
2.9
2.0
-3.2
5.2
3.8
3.7
-1.0
1.4
3.5
4.7
2.1
4.1
6.2
6.1
1.3
7.0
6.9
-3.5
5.4
3.8
5.1
4.9
6.9
5.8
5.4
6.4
3.5
6.7
2.9
-0.6
4.3
5.3
3.3
4.0
-4.1
4.4
6.8
6.6
2.7
7.3
4.7
6.8

3.4
4.9
0.8
-2.0
4.5
2.4
-1.2
3.9
3.8
3.4
1.1
0.8
4.0
4.8
1.9
4.3
5.7
5.9
0.1
7.5
6.7
-4.1
3.5
2.8
5.2
2.3
6.2
4.8
7.0
6.8
-0.3
6.2
2.8
0.7
3.4
3.9
2.8
4.2
-1.1
2.9
7.1
4.7
1.6
7.9
3.0
6.5

5.5
5.3
-0.2
-1.5
3.0
2.2
-0.4
5.2
3.0
2.3
-0.6
0.2
1.4
-8.1
2.0
3.4
4.9
5.2
3.9
7.1
6.0
0.4
0.5
-1.7
5.0
2.3
5.5
4.4
4.9
2.9
5.9
6.1
2.2
2.3
1.3
1.2
3.0
2.3
18.7
2.8
7.0
3.1
2.0
8.2
3.8
4.0

-2.2
1.8
-6.2
-4.0
-7.9
-2.3
-9.5
0.8
-14.9
-1.3
-8.0
-7.0
-3.0
-8.0
-4.5
-2.1
0.0
1.0
1.1
-3.1
2.3
-5.5
-15.7
-6.1
-2.1
0.6
3.3
-5.6
-5.4
-3.3
-3.8
-9.6
-0.9
-2.7
-5.4
-4.5
3.1
-6.1
-8.5
-2.3
2.9
-4.7
-8.9
3.5
-0.8
-10.6

2.9
4.3
2.9
0.0
5.7
1.4
3.6
2.5
3.8
2.1
2.1
3.8
1.5
6.3
5.0
4.5
6.8
6.7
0.0
1.9
7.8
2.8
-4.1
6.7
3.4
0.3
2.1
3.5
4.6
-18.1
1.0
4.9
4.3
-7.8
6.9
1.0
6.0
1.1
2.2
4.0
2.5
7.4
-5.8
5.5
-2.3
8.4

4.4
5.0
2.6
2.4
4.5
2.7
4.6
4.0
6.7
3.8
2.9
2.3
0.9
4.1
3.5
4.4
5.0
4.9
3.5
5.5
5.2
1.5
6.2
3.0
4.9
2.3
4.2
5.6
6.0
-0.8
5.7
5.5
3.0
3.0
3.8
4.1
3.1
4.0
4.0
4.5
6.8
5.9
4.8
5.8
4.5
6.5

4.1
5.4
2.9
3.3
4.8
5.0
6.8
4.3
5.1
5.1
3.7
2.1
4.5
4.2
3.5
3.8
5.4
5.4
5.0
6.2
5.5
1.4
5.0
3.4
6.0
3.0
7.2
5.7
6.8
7.3
4.3
7.7
4.5
2.6
4.0
5.4
5.1
3.5
-0.2
2.9
5.4
5.6
5.6
6.4
4.8
5.9

167

ANNEX TABLES

Table A.3

Developing economies: rates of growth of real GDP (continued)
Annual percentage change

1999–2013a

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

3.1
5.1
4.2
4.1
5.5

4.6
7.3
6.0
4.7
5.0

-1.3
2.9
3.3
5.5
5.0

13.4
6.3
0.6
5.6
4.5

3.8
7.2
8.2
5.8
3.6

-5.4
8.1
6.7
1.1
3.3

-6.5
7.0
7.0
-0.9
2.3

-5.7
-31.5
-8.5
4.7
-3.6

2.9
17.9
-1.7
0.8
3.4

3.1
16.5
5.5
4.2
2.6

2.6
9.5
3.9
3.8
3.5

Iran (Islamic Republic of)
Maldives
NepalePakistane
Sri Lanka
East and South Asia –net fuel exporters
East and South Asia –net fuel importers
Western Asia
Western Asia – net fuel exporters
Bahrain
Iraq
KuwaitOman
Qatar
Saudi Arabia
United Arab Emirates
Yemen
Western Asia – net fuel importers
IsraelJordanLebanonState of Palestine

4.3

4.6

3.3

6.5

5.2

2.3

1.7

-0.6

3.2

4.4

5.2

7.7
4.4
4.5
5.2
4.8
4.4
3.6
10.9
3.5
4.8
3.1
4.2
3.8
5.2
4.3
4.3

6.5
3.4
2.7
4.4
0.2
0.5
1.5
4.0
3.7
4.3
-10.6
4.3
4.4
3.4
2.5
-0.2

6.2
3.8
3.2
2.9
4.7
0.6
4.6
3.7
4.1
5.1
-30.5
4.6
2.1
2.5
0.6
3.7

6.2
3.3
3.3
3.6
13.8
2.9
5.1
2.1
1.7
3.1
-14.6
3.4
4.5
2.0
1.6
8.9

6.2
2.5
-0.4
3.9
-3.8
-4.7
0.3
1.6
-0.7
2.4
-10.0
6.2
4.4
2.1
0.8
1.4

6.0
2.4
1.7
1.8
0.9
2.4
0.9
1.5
2.4
1.2
-1.3
3.1
4.1
1.9
-1.7
1.2

5.1
1.4
1.4
1.8
4.4
-0.6
-0.8
-0.2
0.3
3.4
2.1
1.5
3.7
2.0
-7.2
1.4

0.1
-3.4
-5.7
-5.5
-11.2
-8.9
-3.2
-3.9
-4.1
-6.1
-5.2
-0.9
-2.1
-1.6
-37.1
-12.3

7.1
4.7
2.5
2.6
2.4
2.0
2.2
2.3
2.4
3.0
1.1
7.0
6.8
2.1
-16.2
7.1

5.1
4.8
5.6
3.4
6.2
5.8
4.5
4.2
6.0
5.9
2.5
3.9
4.3
2.8
10.1
2.4

5.5
3.5
3.8
3.2
4.2
3.9
3.5
3.3
3.5
4.2
3.2
3.3
4.0
2.8
6.7
2.0

Syrian Arab RepublicTurkeyLatin America and the Caribbean gSouth America
Argentina
Bolivia (Plurinational State of)BrazilChile
Colombia
EcuadorParaguay
Peru
Uruguay
Venezuela (Bolivarian Republic of)
Mexico and Central America

-0.7
4.5
3.0
3.2
2.5
3.9
3.3
4.0
3.6
3.7
4.1
5.2
2.6
2.6
2.5

-10.3
4.9
1.0
0.2
-2.5
5.5
0.5
1.8
4.5
3.8
4.9
2.4
3.2
-3.9
3.0

-3.2
6.1
0.1
-1.3
2.7
4.9
-3.5
2.3
3.0
0.1
3.1
3.3
0.4
-6.2
3.6

-5.6
3.3
-1.2
-3.0
-2.1
4.3
-3.3
1.7
2.1
-1.2
4.3
4.0
1.7
-17.0
3.1

-0.7
7.5
1.0
0.3
2.7
4.2
1.3
1.2
1.4
2.4
5.0
2.5
2.6
-15.7
2.5

1.5
3.0
0.7
-0.1
-2.5
4.2
1.8
3.9
2.5
1.3
3.4
4.0
1.6
-19.6
2.5

3.7
0.9
-0.6
-1.1
-2.2
2.2
1.4
0.9
3.3
0.1
0.2
2.2
0.2
-35.0
0.5

-11.7
1.8
-7.4
-7.0
-9.9
-8.0
-4.1
-5.8
-6.8
-7.8
-0.6
-11.0
-5.9
-30.0
-8.2

2.1
8.1
6.5
6.7
9.8
5.2
4.7
11.8
9.5
3.1
4.6
13.5
3.9
-3.0
6.1

2.2
3.7
2.2
1.6
2.2
3.2
0.5
1.9
3.7
2.6
3.8
3.0
3.1
3.0
3.4

5.0
3.0
2.5
2.4
2.6
3.0
1.9
2.6
3.3
2.0
3.7
2.9
2.3
6.5
2.7

Costa Rica
Cuba

4.1
4.8

3.5
1.0

3.6
4.4

4.2
0.5

3.9
1.8

2.7
2.2

2.1
2.0

-4.1
-10.8

5.5
0.5

3.7
3.5

3.3
4.5

Dominican Republic
El Salvador
GuatemalaHaitieHonduras

4.8
2.0
3.5
1.1
3.7

7.1
1.4
4.4
2.8
3.1

6.9
2.4
4.1
1.2
3.8

6.7
2.5
2.7
1.5
3.9

4.7
2.2
3.0
1.2
4.8

7.0
2.4
3.2
1.5
3.7

5.1
2.4
3.8
-1.7
2.7

-6.8
-7.9
-1.5
-3.3
-9.0

10.4
10.0
5.4
-1.4
9.0

5.5
3.8
4.3
2.0
4.5

5.2
2.6
3.6
1.6
3.4

e

168

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.3

Developing economies: rates of growth of real GDP (continued)
Annual percentage change

MexicoNicaragua
PanamaCaribbean
BahamasBarbados
BelizeGuyanaJamaica
Suriname
Trinidad and Tobago
Latin America and the Caribbean – net
fuel exporters
Latin America and the Caribbean – net
fuel importers
Memorandum items:
Least developed countries
Africa (excluding Libya)
North Africa (excluding Libya)
East Asia (excluding China)
South Asia (excluding India)
Western Asia
(excluding Israel and Turkey)
Arab States hLandlocked developing economies
Small island developing States

1999–2013a

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

2.1
3.9
6.2
2.8
1.3
0.6
4.3
6.1
0.6
4.0

2.8
4.8
5.1
0.2
1.1
-0.1
3.6
1.7
0.7
0.3

3.3
4.8
5.7
0.8
0.2
2.4
2.8
0.7
0.9
-3.4

2.9
4.6
5.0
-1.5
1.4
2.5
0.1
3.8
1.4
-5.6

2.1
4.6
5.6
0.2
3.1
0.5
1.9
3.7
1.0
1.8

2.1
-4.0
3.6
1.5
3.0
-0.6
2.1
4.4
1.9
2.6

-0.3
-3.9
3.0
0.4
1.2
-0.1
0.3
5.4
0.9
0.3

-8.3
-2.0
-17.9
-7.2
-14.5
-18.0
-14.0
43.0
-10.2
-15.9

5.8
7.4
12.4
3.2
2.3
1.5
2.7
18.5
4.0
-1.0

2.9
3.0
7.3
11.5
8.5
7.5
6.2
46.0
5.7
1.5

2.2
2.5
4.5
3.7
4.0
3.3
2.8
8.7
2.7
1.7

5.2
3.2

-0.9
0.2

1.5
-1.6

-5.6
-7.0

-3.0
-5.3

0.1
-5.5

-1.2
-8.9

-7.8
-12.1

-1.0
5.6

5.7
3.4

1.9
3.5

3.0

1.1

0.4

-0.2

2.0

1.7

0.6

-6.7

6.6

2.1

2.4

6.0
5.0
4.3
4.9
4.2
4.4

5.7
4.9
3.9
4.1
4.7
2.5

3.7
3.5
4.2
3.7
3.3
3.0

4.0
1.9
3.3
3.8
7.5
3.2

4.9
3.0
3.7
4.2
5.3
-0.3

5.2
3.2
3.8
4.0
0.8
1.7

4.5
2.8
2.7
3.2
-0.2
1.3

0.8
-2.2
-2.4
-2.4
0.8
-6.6

1.4
3.8
4.8
3.8
3.9
2.2

4.0
4.0
4.8
4.0
4.1
5.6

5.7
3.6
2.8
5.0
4.4
3.8

4.1
6.6
4.9

1.5
5.6
3.9

2.7
3.8
3.5

3.1
3.3
2.9

1.2
4.7
3.5

2.5
4.9
3.3

1.8
4.4
2.1

-6.0
-1.6
-6.8

4.0
4.1
5.5

5.4
4.4
4.9

3.5
4.8
4.2

Source: UN DESA, based on data of the United Nations Statistics Division and individual national sources.
Note: Regional aggregates calculated at 2015 prices and exchange rates.
a Average percentage change.
b Partly estimated.
c Baseline scenario forecasts, based in part on the UN DESA World Economic Forecasting Model.
d Covering countries that account for 98 per cent of the population of all developing countries.
e Fiscal year basis.
f Special Administrative Region of China.
g Figures for Latin America and the Caribbean for 2021–2022 were provided by UN ECLAC.
h Currently includes data for Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, Somalia,
Sudan, Syrian Arab Republic, Tunisia, United Arab Emirates, and Yemen.

169

ANNEX TABLES

Table A.4

Growth of world output and gross domestic product by SDG regions
Annual percentage change

2019

2020

2021a

2022b

2023b

World
AfricaNorth Africa
East Africa
Middle Africa
Southern Africa

2.5
2.8
2.9
5.4
0.8
0.3

-3.4
-3.0
-4.6
0.1
-2.5
-7.0

5.5
4.7
7.7
3.9
1.4
3.8

4.0
4.0
4.9
4.6
3.1
2.5

3.5
3.7
3.0
5.4
3.9
2.4

West Africa
AmericasNorthern America
Latin America and the Caribbean

3.4
1.7
2.3
-0.6

-0.8
-4.3
-3.6
-7.4

3.2
5.7
5.5
6.5

3.7
3.3
3.5
2.2

4.0
2.4
2.4
2.5

Caribbean
Central America
South America
Asia
Central Asia
East Asia
South Asia
South-east Asia
Western Asia
EuropeEastern Europe
Northern Europe
Southern Europe
Western Europe
Oceania

2.5
0.2
-1.1
3.8
4.7
4.2
3.1
4.4
1.5
1.7
3.0
1.8
1.2
1.5
2.1

-9.1
-8.2
-6.9
-1.1
-0.4
0.4
-4.7
-3.9
-3.5
-6.1
-3.4
-6.2
-9.2
-5.6
-2.4

4.4
6.1
6.7
6.0
4.7
6.4
7.4
2.8
4.7
4.8
4.6
5.8
5.5
4.0
3.2

4.8
3.2
1.7
4.8
4.7
4.6
5.9
4.8
4.8
3.9
3.3
4.1
4.6
3.6
4.1

4.3
2.4
2.5
4.9
4.2
4.9
5.6
5.5
3.6
2.5
3.1
2.4
2.9
2.2
3.0

Source: UN DESA, based on data of the United Nations Statistics Division and UN DESA forecasts.
Notes: Regional aggregates in this table follow geographic regions defined under the Standard Country or Area Codes for Statistical Use (known as M49) and are
not strictly comparable to those in the WESP. Full details on the M49 standard can be found at the United Nations Statistics Division. Calculated at 2015 prices andexchange rates. Figures are based on the countries actively monitored for the World Economic Situation and Prospects report.
a Partly estimated.
b Baseline scenario forecasts, based in part on UN DESA World Economic Forecasting Model.

170WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.5

Developed economies: consumer price inflation
Annual percentage change a

Developed economies
United States
CanadaJapan
Australia
New Zealand
European Union
Austria
Belgium
Bulgaria
Croatia
CyprusCzechia
Denmark
Estonia
FinlandFranceGermany
GreeceHungary
IrelandItaly
LatviaLithuania
Luxembourg
Malta
Netherlands
PolandPortugal
Romania
Slovakia
Slovenia
Spain
SwedenOther European countries
Iceland
NorwaySwitzerland
United Kingdomd
Memorandum items:
Northern America
Developed Asia and the Pacific
EuropeMajor developed economies
Euro area

2013

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

1.4
1.5
0.9
0.3
2.5
1.1
1.4
2.1
1.2
0.4
2.3
0.4
1.3
0.5
3.2
2.2
1.0
1.6
-0.9
1.7
0.5
1.3
0.0
1.2
1.7
1.0
2.6
0.8
0.4
3.2
1.5
1.9
1.5
0.4
2.0
4.1
2.0
0.1
2.5

1.4
1.6
1.9
2.8
2.5
1.2
0.4
1.5
0.5
-1.6
0.2
-0.3
0.5
0.4
0.5
1.2
0.6
0.7
-1.4
0.0
0.3
0.2
0.7
0.2
0.7
0.8
0.3
0.1
-0.2
1.4
-0.1
0.4
-0.2
0.2
1.3
1.0
1.9
0.0
1.5

0.3
0.1
1.1
0.8
1.5
0.3
0.2
0.8
0.6
-1.1
-0.3
-1.5
0.2
0.2
0.1
-0.2
0.1
0.7
-1.1
0.1
0.0
0.1
0.2
-0.7
0.1
1.2
0.2
-0.7
0.5
-0.4
-0.3
-0.8
-0.6
0.7
0.1
0.3
2.0
-0.8
0.0

0.8
1.3
1.4
-0.1
1.3
0.6
0.2
1.0
1.8
-1.3
-0.6
-1.2
0.7
0.0
0.8
0.4
0.3
0.4
0.0
0.4
-0.2
-0.1
0.1
0.7
0.0
0.9
0.1
-0.2
0.6
-1.1
-0.5
-0.1
-0.3
1.1
0.8
0.8
3.9
-0.5
0.7

1.8
2.1
1.6
0.5
1.9
1.9
1.5
2.2
2.2
1.2
1.3
0.7
2.4
1.1
3.7
0.8
1.2
1.7
1.1
2.4
0.3
1.4
2.9
3.7
2.1
1.3
1.3
1.6
1.6
1.1
1.4
1.6
2.0
1.9
2.2
-1.6
1.8
0.6
2.7

2.0
2.4
2.3
1.0
1.9
1.6
1.8
2.1
2.3
2.6
1.5
0.8
1.9
0.7
3.4
1.2
2.1
1.9
0.8
2.9
0.7
1.2
2.6
2.5
2.0
1.7
1.6
1.2
1.2
4.1
2.5
1.9
1.7
2.0
2.2
0.7
3.0
0.9
2.4

1.5
1.8
1.9
0.5
1.6
1.6
1.4
1.5
1.2
2.4
0.8
0.5
2.6
0.7
2.3
1.1
1.3
1.4
0.5
3.4
0.9
0.7
2.7
2.2
1.7
1.5
2.7
2.1
0.3
3.9
2.8
1.7
0.8
1.7
1.6
2.0
2.3
0.4
1.8

0.8
1.2
0.7
0.0
0.8
1.7
0.5
1.4
0.4
1.2
0.0
-1.1
3.3
0.4
-0.6
0.4
0.5
0.4
-1.3
3.4
-0.5
-0.2
0.1
1.1
0.0
0.8
1.1
3.6
-0.1
2.3
2.0
-0.3
-0.3
0.7
0.7
2.9
1.2
-0.8
1.0

3.2
4.6
3.5
0.0
3.2
3.9
2.5
2.7
2.4
3.0
2.5
1.5
3.8
1.4
3.1
2.0
1.9
2.9
1.2
4.8
2.7
1.9
2.9
3.5
3.1
1.0
2.3
5.1
1.0
4.4
3.0
2.5
2.7
1.9
2.4
4.5
3.5
0.5
2.7

2.6
3.6
3.1
1.0
2.7
2.8
2.0
2.3
1.6
1.9
2.0
1.5
2.5
1.0
2.5
1.7
2.0
1.9
1.6
3.8
2.0
1.9
1.5
2.5
1.6
1.5
2.1
3.4
1.0
3.5
2.5
2.0
1.9
1.5
2.1
2.7
2.5
1.1
2.2

2.0
2.5
2.5
1.1
2.2
2.5
1.5
2.0
1.5
1.9
1.5
1.5
2.5
1.3
2.1
1.7
1.5
1.5
1.5
3.0
1.5
1.2
2.0
2.3
1.2
1.5
1.7
3.0
1.0
2.1
2.3
2.0
1.3
1.3
2.2
2.3
0.1
1.2
2.7

1.4
0.8
1.3
1.4
1.4

1.6
2.7
0.4
1.5
0.4

0.2
0.9
0.2
0.3
0.2

1.3
0.2
0.3
0.8
0.3

2.1
0.8
1.5
1.8
1.5

2.4
1.2
1.7
2.1
1.7

1.8
0.7
1.4
1.5
1.3

1.2
0.2
0.5
0.8
0.3

4.5
0.8
2.4
3.3
2.4

3.5
1.4
2.0
2.7
1.9

2.5
1.4
1.5
2.1
1.5

Source: UN DESA, based on OECD Main Economic Indicators, Eurostat and individual national sources.
a Data for country groups are weighted averages, where weights for each year are based on 2015 GDP in United States dollars.
b Partly estimated.
c Baseline scenario forecasts, based on UN DESA World Economic Forecasting Model.
d The United Kingdom withdrew from the EU on 31 January 2020 and is therefore excluded from all EU aggregations.

171

ANNEX TABLES

Table A.6

Economies in transition: consumer price inflation
Annual percentage change a

2013

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

Economies in transition
South-Eastern Europe
Albania
Bosnia and Herzegovina
Montenegro
North Macedonia
SerbiaCommonwealth of Independent Statesand Georgiad

6.6
4.5
1.9
-0.1
2.2
2.7
7.7

7.7
1.1
1.6
-0.9
-0.7
0.0
2.3

14.6
1.1
3.5
-1.0
1.5
0.1
1.5

8.0
0.3
-0.4
-1.6
-0.3
0.2
1.3

5.4
2.5
2.1
0.8
2.4
2.1
3.4

4.4
2.0
2.0
1.4
2.6
2.3
2.0

5.0
1.3
1.4
0.6
0.4
0.7
1.9

4.1
1.0
1.6
-1.1
-0.3
1.2
1.7

6.7
3.0
3.3
1.7
2.8
3.0
3.4

4.0
2.5
3.2
1.5
1.7
2.0
2.9

3.5
2.4
2.0
1.9
0.9
1.6
3.0

6.7

8.0

15.2

8.3

5.5

4.5

5.1

4.3

6.9

4.0

3.5

Commonwealth of Independent Statesand Georgia – net fuel exporters
Azerbaijan
Kazakhstan
Russian Federation
Turkmenistan

6.5

7.4

13.9

8.0

4.5

3.5

4.5

3.9

6.4

3.5

3.4

2.4
5.8
6.8
6.8

1.4
6.7
7.8
6.0

4.0
6.7
15.5
7.4

12.4
14.5
7.0
3.6

12.9
7.4
3.7
8.0

2.3
6.0
2.9
13.3

2.6
5.2
4.5
5.1

2.8
6.7
3.4
7.6

4.5
6.4
6.4
10.5

3.8
5.0
3.2
6.1

3.1
4.5
3.2
4.8

Commonwealth of Independent Statesand Georgia – net fuel importers
Armenia
BelarusGeorgia d
Kyrgyzstan
Republic of Moldova
Tajikistan
Ukraine e

7.7

11.1

22.2

10.0

10.9

10.2

8.7

6.7

9.4

7.1

4.5

5.8
18.3
-0.5
6.6
4.6
5.0
-0.2

3.0
18.1
3.1
7.5
5.1
6.1
12.1

3.7
13.5
4.0
6.5
9.7
5.7
48.7

-1.4
11.8
2.1
0.4
6.4
6.0
13.9

1.0
6.0
6.0
3.2
6.6
7.3
14.4

2.5
4.9
2.6
1.5
3.0
3.8
11.0

1.4
5.6
4.9
1.1
4.8
7.8
7.9

1.2
5.5
5.2
6.3
3.8
8.6
2.7

7.6
8.4
8.9
10.7
4.4
10.0
9.0

4.1
5.3
4.6
6.1
12.0
8.8
6.8

3.8
4.8
2.6
5.4
5.0
8.0
5.6

11.7

9.1

8.5

8.8

13.9

17.5

14.5

12.9

11.1

9.0

3.0

Uzbekistan

Source: UN DESA, based on data of the United Nations Statistics Division and individual national sources.
Note: Regional aggregates calculated at 2015 prices and exchange rates.
a Average percentage change.
b Partly estimated.
c Baseline scenario forecasts, based in part on the UN DESA World Economic Forecasting Model.
d Georgia officially left the Commonwealth of Independent States on 18 August 2009. However, its performance is discussed in the context of this group of countries
for reasons of geographic proximity and similarities in economic structure.
e Starting in 2010, data for the Ukraine excludes the temporarily occupied territory of the Autonomous Republic of Crimea and Sevastopol.

172

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.7

Developing economies: consumer price inflation
Annual percentage change a

Developing countries by regiond
AfricaNorth Africa
Algeria
Egypt
Libya
Mauritania
Morocco
Sudan
Tunisia
East Africa
BurundiComoros
Democratic Republic of the Congo
Djibouti
Eritrea
Ethiopia
Kenya
Madagascar
RwandaSomaliaSouth Sudan
UgandaUnited Republic of Tanzania
Central Africa
Cameroon
Central African Republic
Chad
Congo
Equatorial Guinea
Gabon
Sao Tome and Principe
West Africa
Benin
Burkina Faso
Cabo Verde
Côte D’Ivoire
GambiaGhana
GuineaGuinea-Bissau
Liberia
Mali
Niger
Nigeria
SenegalSierra Leone

2013

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

4.8
7.5
9.5
3.3
9.5
2.6
4.1
1.9
36.5
5.3

4.2
7.3
9.5
2.9
10.1
2.4
3.5
0.4
36.9
4.6

3.8
7.3
8.2
4.8
10.4
9.9
3.2
1.6
16.9
4.4

4.7
11.8
10.6
6.4
13.8
25.9
1.5
1.6
17.8
3.6

4.2
14.4
18.9
5.6
29.5
25.8
2.3
0.8
32.4
5.3

3.6
10.9
15.1
4.3
14.4
13.6
3.0
1.8
63.3
7.3

5.2
10.8
10.3
2.0
9.2
-2.1
2.3
0.3
51.0
6.7

5.5
17.2
19.2
2.4
5.0
1.5
2.4
0.7
150.3
5.6

8.1
22.0
43.2
5.1
5.6
3.1
3.5
1.0
368.1
5.5

5.5
12.4
18.5
5.0
7.4
3.5
4.2
1.5
126.6
5.8

4.6
9.2
10.9
3.4
8.1
4.0
4.8
2.0
54.2
6.5

5.6
7.9
-4.3
0.8
2.7
5.9
7.5
5.7
5.8
5.9
-3.2
-0.1
4.9
7.9
2.2
2.1
7.0
0.2
4.6
2.9
0.5
8.1
7.5
0.4
0.5
1.5
2.6
5.7
11.7
11.9
1.2
7.6
-0.6
2.3
8.5
0.7
5.5

5.2
4.4
0.0
1.2
1.3
10.0
6.9
6.9
6.1
2.4
-5.6
1.7
3.1
6.1
2.8
1.8
14.9
1.7
0.9
4.3
4.7
7.0
7.2
-0.5
-0.3
-0.2
0.4
5.9
15.5
7.1
-1.5
9.9
0.9
-0.9
8.1
-1.1
4.6

7.3
5.5
0.9
0.7
-0.8
28.5
9.6
6.6
7.4
2.5
-5.6
52.8
5.4
5.6
2.3
2.7
1.4
4.4
3.2
1.7
-0.3
5.3
8.2
0.2
0.7
0.1
1.3
6.8
17.1
10.8
1.5
7.7
1.5
-0.6
9.0
0.1
6.7

14.3
5.6
0.8
2.9
2.7
-5.6
6.6
6.3
6.0
7.2
0.5
380.0
5.4
5.2
1.4
0.9
4.9
-0.8
3.2
1.4
2.1
5.4
13.0
-0.8
0.4
-1.4
0.7
7.2
17.5
8.2
1.5
8.8
-1.8
1.7
15.7
0.8
10.9

15.8
16.1
0.1
35.8
0.6
-13.3
10.7
8.0
8.6
8.3
3.9
187.9
5.6
5.3
0.8
0.6
4.2
-1.5
0.5
0.7
2.7
5.7
13.4
1.8
1.5
0.8
0.7
8.0
11.7
8.9
1.7
12.4
1.8
2.8
16.5
1.3
18.2

11.5
-2.0
1.7
29.3
0.1
-14.4
13.8
4.7
8.6
-0.3
1.6
83.5
2.6
3.5
2.2
1.1
1.6
4.3
1.2
1.3
4.7
7.9
9.3
0.6
2.0
1.3
0.4
6.5
0.4
9.8
0.4
23.6
0.3
3.0
12.1
0.5
16.0

8.9
-0.8
3.7
4.7
3.3
-16.4
15.8
5.2
5.6
3.3
1.5
87.2
2.9
3.5
1.8
2.5
2.7
-1.0
2.2
1.2
2.5
7.7
9.0
-0.7
-3.2
1.1
-1.1
7.1
7.2
9.5
0.2
27.0
-1.7
-2.5
11.4
1.8
14.8

9.9
7.3
0.9
11.3
1.8
4.9
20.4
5.4
4.2
9.9
0.7
29.7
2.8
3.3
2.7
2.4
2.3
3.5
1.8
4.8
1.2
9.8
11.1
3.0
1.9
0.6
2.4
5.9
10.0
10.6
1.5
17.0
0.4
2.8
13.2
2.5
13.4

8.5
5.0
1.7
9.4
3.4
2.9
14.9
6.5
5.6
6.9
1.7
33.0
3.5
2.7
2.0
2.3
3.7
2.2
2.0
0.5
2.0
8.3
13.8
3.0
3.0
1.5
3.0
7.0
9.3
11.6
1.9
5.9
3.0
2.9
17.0
2.4
11.3

6.9
5.1
2.3
6.4
3.4
4.4
11.9
4.5
5.8
5.1
1.4
29.1
3.8
2.9
2.5
2.1
2.6
2.8
2.8
3.1
2.0
7.8
11.0
2.0
2.6
1.6
2.5
6.3
8.8
9.9
2.0
11.8
2.0
2.5
13.3
2.0
13.3

6.9
5.1
2.4
6.6
3.3
4.4
11.4
4.6
6.1
4.4
1.4
25.2
4.2
3.7
2.5
2.0
2.5
3.0
3.0
3.1
2.0
5.8
9.8
2.0
2.5
1.7
2.2
6.1
8.0
8.0
2.0
9.6
2.0
2.0
11.8
1.5
11.4

173

ANNEX TABLES

Table A.7

Developing economies: consumer price inflation (continued)
Annual percentage change a

TogoSouthern Africa
AngolaBotswana
Lesotho
Malawi
Mauritius
Mozambique
NamibiaSouth Africa
Eswatini
ZambiaZimbabwe
Africa – net fuel exporters
Africa – net fuel importers
East and South Asia
East Asia
Brunei Darussalam
Cambodia
Democratic People’s Republicof Korea
China
Fiji
Hong Kong SARe
Indonesia
Kiribati
Lao People's Democratic Republic
Malaysia
Mongolia
Myanmar
Papua New Guinea
Philippines
Republic of Korea
Samoa
Singapore
Solomon Islands
Taiwan, Province of China
Thailand
Timor-Leste
Vanuatu
Viet NamSouth Asia
Afghanistan
Bangladesh
BhutanIndia
Iran (Islamic Republic of)

2013

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

1.8
6.5
8.8
5.9
5.6
4.9
27.3
3.5
4.3
5.6
5.8
7.0
1.6
7.0
7.8
4.4
2.6
0.4
2.9
2.6

0.2
6.2
7.3
4.4
5.7
5.4
23.8
3.2
2.6
5.4
6.1
7.8
-0.2
6.8
7.6
3.0
2.1
-0.2
3.9
1.9

2.6
5.5
9.2
3.1
5.0
3.2
21.9
1.3
3.6
3.4
4.5
10.1
-2.4
8.0
6.7
2.3
1.5
-0.5
1.2
1.4

1.3
12.2
30.7
2.8
7.8
6.6
21.7
1.0
17.4
6.7
6.6
17.9
-1.5
15.0
9.6
2.5
1.9
-0.3
3.0
2.0

-1.0
10.7
29.8
3.3
6.2
4.4
11.5
3.7
15.1
6.1
5.2
6.6
0.9
14.8
14.1
2.2
2.0
-1.3
2.9
1.6

0.9
8.1
19.6
3.2
4.8
4.8
12.4
3.2
3.9
4.3
4.5
7.5
10.6
10.1
11.5
2.8
2.1
1.0
2.5
2.1

0.7
16.3
17.1
2.8
2.6
5.2
9.4
0.4
2.8
3.7
4.1
9.2
255.3
9.0
12.1
4.0
2.5
-0.4
2.0
2.9

1.8
28.3
22.3
1.9
3.9
5.0
8.6
2.5
3.1
2.2
3.2
15.7
557.2
11.0
21.5
3.2
1.9
1.9
2.9
2.4

2.7
13.2
25.9
6.8
4.7
5.1
7.9
2.9
8.4
2.8
5.1
19.9
84.9
13.9
27.6
3.0
1.5
1.5
2.9
1.3

2.5
10.0
22.3
2.6
5.0
5.3
6.0
3.5
8.3
3.4
5.3
8.3
29.9
11.5
12.9
3.0
2.0
0.7
2.5
1.9

2.2
8.5
17.3
3.8
5.5
5.3
4.9
3.6
7.6
4.2
5.6
6.3
17.9
9.8
8.9
3.4
2.6
2.5
1.6
2.6

1.6
2.9
-0.3
6.4
-1.5
6.4
2.1
10.5
5.6
5.0
2.6
1.3
0.6
1.7
5.4
0.8
2.2
11.0
1.5
6.6
13.5
7.4
7.5
7.0
10.9
36.6

3.7
0.5
0.8
6.4
2.1
4.1
3.1
12.3
5.0
5.2
3.6
1.3
-0.4
0.4
5.2
1.2
1.9
0.8
0.8
4.1
7.7
4.7
7.0
8.3
6.4
16.6

3.1
1.4
2.0
6.4
0.6
1.3
2.1
5.7
9.5
6.0
0.7
0.7
0.7
1.0
-0.6
-0.3
-0.9
0.6
2.5
0.6
6.4
-0.7
6.2
4.5
5.9
12.5

-0.6
3.9
2.0
3.5
1.9
1.6
2.1
0.7
6.9
6.7
1.3
1.0
1.3
2.1
0.5
1.4
0.2
-1.5
0.8
2.7
5.2
4.4
5.5
3.2
4.9
7.2

7.2
3.3
4.3
3.8
0.4
0.8
3.9
4.3
4.6
5.4
2.9
1.9
1.7
6.6
0.5
0.6
0.7
0.5
3.1
3.5
3.7
5.0
5.7
5.0
2.5
8.0

2.3
4.1
0.6
3.2
0.6
2.0
0.9
6.8
6.9
4.4
5.2
1.5
4.2
0.6
3.5
1.4
1.1
2.3
2.3
3.5
6.5
0.6
5.5
2.7
4.9
18.0

-4.6
1.8
2.3
3.0
-1.9
3.3
0.7
7.3
8.8
2.7
2.5
0.4
1.0
2.8
1.6
0.6
0.7
1.0
2.8
2.8
11.7
2.3
5.6
2.7
7.7
39.9

-2.1
-2.6
0.3
1.9
2.5
5.1
-1.1
3.7
5.7
5.1
2.6
0.5
-1.6
-0.2
3.0
-0.2
-0.8
0.5
2.9
3.2
9.9
5.6
5.7
5.6
5.6
36.5

2.5
1.0
1.5
1.6
1.1
3.7
2.5
7.0
6.2
4.5
4.8
2.1
-3.0
1.7
2.5
1.7
1.1
1.6
4.1
2.0
10.4
5.9
5.5
6.8
5.9
40.0

3.4
3.0
2.1
2.8
1.5
4.0
2.3
8.5
4.0
4.0
3.9
1.5
2.7
1.5
3.5
1.0
1.0
2.2
3.6
2.5
8.4
4.7
5.4
6.5
5.6
26.2

3.6
0.5
3.3
2.6
2.2
3.5
1.4
9.2
4.3
3.5
3.4
2.4
2.7
2.5
2.1
2.3
1.6
2.4
2.5
4.0
7.5
3.9
5.3
5.2
5.3
21.7

174

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.7

Developing economies: consumer price inflation (continued)
Annual percentage change a

2013

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

Maldives
Nepal
Pakistan
Sri Lanka
East and South Asia –net fuel exporters
East and South Asia –net fuel importers
Western Asia
Net fuel exporters
Bahrain
Iraq
KuwaitOman
Qatar
Saudi Arabia
United Arab Emirates
Yemen
Net fuel importers
IsraelJordanLebanonState of Palestine
Syrian Arab RepublicTurkeyLatin America and the Caribbeand
South Americad
Argentina
Bolivia (Plurinational State of)BrazilChile
Colombia
EcuadorParaguay
Peru
Uruguay
Venezuela (Bolivarian Republic of)

3.8
9.0
7.7
6.9
15.5

2.1
8.4
7.2
3.2
9.5

1.0
7.9
2.5
3.8
8.1

0.5
8.8
3.8
4.0
4.6

2.8
3.6
4.1
7.7
5.1

-0.1
4.1
5.1
2.1
7.7

0.2
5.6
10.6
3.5
14.2

-1.4
5.1
9.7
6.2
12.5

1.4
4.5
8.6
5.5
13.3

2.3
5.5
8.3
5.9
9.9

2.2
5.4
6.1
5.2
8.5

3.6

2.6

1.9

2.3

2.0

2.4

3.2

2.5

2.2

2.5

3.0

4.3
2.7
3.3
1.9
2.7
1.0
3.2
3.5
1.1
11.0
6.2
1.6
4.8
4.8
1.7
27.8
7.5
5.3
6.1
10.6
5.8
6.2
1.9
2.0
2.7
2.7
2.8
8.6

4.3
2.5
2.6
2.2
2.9
1.0
3.3
2.2
2.3
8.1
6.6
0.5
2.9
1.9
1.7
20.1
8.9
7.0
8.5
21.4
5.8
6.3
4.7
2.9
3.6
5.0
3.2
8.9

3.8
2.4
1.8
1.4
3.3
0.1
1.8
1.2
4.1
22.0
5.5
-0.6
-0.9
-3.7
1.4
38.2
7.7
7.6
10.1
21.5
4.1
9.0
4.3
5.0
4.0
3.1
3.6
8.7

3.8
2.2
2.8
0.6
3.2
1.1
2.7
2.1
1.6
21.3
5.7
-0.5
-0.8
-0.8
-0.2
47.7
7.7
10.1
13.7
40.5
3.6
8.7
3.8
7.5
1.7
4.1
3.6
9.6

4.1
0.9
1.4
0.2
2.2
1.6
0.4
-0.8
2.0
30.4
8.1
0.2
3.3
4.3
0.2
19.4
11.1
6.8
7.6
25.7
2.8
3.4
2.2
4.3
0.4
3.6
2.8
6.2

40.6

62.2

121.7

254.9

438.1

6.5
2.4
2.1
0.4
0.5
0.9
0.3
2.5
3.1
27.6
11.5
0.8
4.5
6.1
-0.2
0.9
16.3
7.5
9.1
34.2
2.3
3.7
2.4
3.2
-0.2
4.0
1.3
7.6
...

4.2
-1.1
1.0
-0.2
1.1
0.1
-0.7
-2.1
-1.9
10.0
10.8
0.8
0.8
3.0
1.6
13.4
15.2
8.4
10.9
41.0
1.9
4.4
2.3
3.5
0.0
3.2
2.1
7.6
...

6.4
1.3
-2.3
0.6
2.1
-0.9
-2.5
3.4
-2.1
26.2
12.8
-0.6
0.3
84.9
-0.7
84.7
12.3
8.1
10.5
42.6
1.0
3.2
3.0
2.5
-0.3
1.8
1.8
9.8
...

9.7
2.7
-0.4
5.8
3.1
1.6
1.9
3.2
0.3
12.0
18.3
1.7
1.5
128.0
1.4
33.7
18.4
11.5
14.6
48.2
0.5
8.4
4.5
3.4
0.1
4.3
4.1
7.7
...

6.5
2.3
1.0
3.6
2.7
2.4
2.2
2.1
1.0
15.4
11.7
1.8
1.9
64.9
1.9
19.6
12.4
10.5
13.6
46.5
1.7
6.9
4.6
4.1
1.2
4.1
4.2
7.0
...

3.9
1.8
2.1
3.0
2.5
2.8
2.6
0.7
1.7
15.0
6.4
1.8
2.2
8.5
2.1
15.7
7.8
7.4
9.2
33.0
1.9
3.8
2.8
3.7
1.0
3.2
2.9
6.7
...

Mexico and Central America
Costa Rica
Cuba
Dominican Republic
El Salvador
GuatemalaHaiti
Honduras

3.8
5.2
0.6
4.8
0.8
4.3
5.9
5.2

3.8
4.5
1.1
3.0
1.1
3.4
4.6
6.1

2.6
0.9
4.9
0.8
-0.7
2.4
9.0
3.2

2.5
0.0
-0.5
1.6
0.6
4.4
13.8
2.7

5.0
1.6
-1.1
3.3
1.0
4.4
14.7
3.9

4.4
2.2
1.9
3.6
1.1
3.8
14.0
4.3

3.5
2.0
5.6
1.8
1.7
4.3
16.9
4.2

3.5
0.7
9.9
3.8
-0.4
3.2
20.3
3.5

9.0
1.6
71.0
7.7
3.4
4.5
23.8
4.6

5.6
2.4
29.8
4.6
2.5
4.0
24.8
4.2

4.0
2.1
7.0
4.4
2.2
4.1
23.6
4.1

175

ANNEX TABLES

Table A.7

Developing economies: consumer price inflation (continued)
Annual percentage change a

MexicoNicaragua
PanamaCaribbean
BahamasBarbados
BelizeGuyanaJamaica
Suriname
Trinidad and Tobago
Latin America and the Caribbean –net fuel exporters
Latin America and the Caribbean –net fuel importers
Memorandum items:
Least developed countries
East Asia (excluding China)
South Asia (excluding India)
Western Asia
(excluding Israel and Turkey)
Arab Statesf
Landlocked developing economies
Small island developing States

2013

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

3.8
7.1
4.0
4.4
0.3
1.8
0.5
2.1
9.4
1.9
5.2
2.6

4.0
6.0
2.6
4.5
1.2
1.9
1.0
0.6
8.3
3.4
5.7
3.4

2.8
3.9
0.1
3.2
1.9
-1.1
-0.7
-1.0
3.7
6.9
4.6
4.7

2.8
3.4
0.7
5.6
-0.3
1.1
0.7
0.8
2.3
53.0
3.1
5.7

6.0
4.0
0.9
4.0
1.5
4.7
1.1
1.9
4.4
21.5
1.9
3.2

4.9
4.8
0.8
2.4
2.3
3.7
0.3
1.2
3.7
6.9
1.0
2.3

3.6
4.4
0.4
2.4
2.5
4.1
0.2
2.4
4.2
4.4
0.8
2.5

3.4
3.7
-1.5
4.3
0.0
2.9
0.1
3.2
5.2
34.9
0.6
1.7

5.5
4.6
1.6
6.6
1.7
2.5
2.2
3.3
5.3
58.0
1.5
2.4

4.2
4.3
1.8
6.2
2.4
3.0
2.5
5.9
4.7
47.9
1.7
3.2

3.8
4.0
1.4
4.5
1.9
2.2
2.2
3.1
4.6
27.0
2.1
2.9

5.6

7.3

8.0

10.6

7.1

1.4

8.3

8.9

21.9

11.8

7.9

9.0
2.6
19.0

8.2
2.6
10.5

7.9
1.8
7.4

12.8
1.8
5.6

14.1
2.8
6.3

14.3
2.0
9.9

11.7
1.6
20.2

21.7
0.8
18.9

39.6
2.1
19.9

18.3
2.0
14.4

11.5
2.5
12.0

3.1
5.1
6.1

2.7
4.7
5.7

2.6
4.3
6.2

2.6
5.0
11.3

1.3
6.7
8.8

2.5
6.3
7.7

-0.8
2.6
13.3

4.7
9.1
21.9

6.7
17.8
9.6

4.3
8.6
6.7

2.2
4.9
5.2

2.5

1.7

2.1

2.4

4.5

1.8

3.1

2.6

72.8

6.8

3.9

Source: UN DESA, based on data of the United Nations Statistics Division, individual national sources and UN DESA forecasts.
a Data for country groups are weighted averages, where weights for each year are based on 2015 GDP in United States dollars.
b Partly estimated.
c Baseline scenario forecasts, based in part on UN DESA World Economic Forecasting Model.
d Regional aggregates exclude Venezuela (Bolivarian Republic of).
e Special Administrative Region of China.
f Includes data for Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, Somalia, Sudan,
Syrian Arab Republic, Tunisia, United Arab Emirates, and Yemen.

176

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.8

Selected economies: real effective exchange rates, broad measurementa, b
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021c

Developed economies
Australia

100.0

94.9

90.2

81.0

81.6

84.0

80.9

77.0

75.6

80.1

Austria

100.0

101.7

103.2

101.1

102.5

103.3

104.3

103.4

105.0

105.4

Belgium

100.0

101.2

101.3

97.5

100.0

101.2

102.9

101.4

102.2

102.6

Bulgaria

100.0

99.9

99.6

96.9

96.8

96.5

100.2

100.0

102.6

104.0

Canada

100.0

96.5

90.3

81.3

79.3

80.4

79.8

79.0

77.9

82.1

Croatia

100.0

100.7

100.4

98.6

99.6

99.6

101.3

100.0

98.5

99.0

Czechia

100.0

97.4

92.3

91.4

93.8

96.8

100.8

101.0

101.5

105.2

Denmark

100.0

100.7

101.6

97.3

98.2

98.3

99.3

97.5

98.7

97.3

Finland

100.0

102.3

104.9

101.9

103.1

102.0

104.1

102.7

104.1

103.6

France

100.0

101.2

101.3

96.3

97.4

97.6

99.2

97.7

98.7

98.7

Germany

100.0

102.0

102.7

98.3

99.7

100.3

102.2

100.6

101.6

102.2

Greece

100.0

99.3

98.0

92.0

93.0

92.5

90.6

88.2

87.5

86.9

Hungary

100.0

98.4

95.1

92.6

93.2

94.3

93.6

92.6

88.8

92.0

Ireland

100.0

101.5

100.5

92.7

93.9

94.0

94.9

92.2

92.1

92.8

Italy

100.0

101.6

101.8

97.0

97.9

98.1

98.8

96.5

96.8

96.9

Japan

100.0

80.3

75.5

70.1

78.7

74.6

74.3

76.1

76.7

70.8

Netherlands

100.0

102.9

102.9

98.4

99.5

99.4

100.6

100.5

102.4

102.7

New Zealand

100.0

103.7

108.4

102.1

104.6

107.6

101.8

100.9

102.2

108.5

Norway

100.0

97.9

92.7

84.9

86.1

86.7

87.4

85.4

79.6

83.8

Poland

100.0

100.0

101.1

98.4

94.8

96.7

97.3

96.2

96.9

97.5

Portugal

100.0

100.0

99.3

96.9

98.3

97.4

96.1

95.1

96.6

95.8

Romania

100.0

103.7

105.1

102.5

101.3

99.0

101.1

100.6

101.5

101.1

Slovakia

100.0

101.1

101.9

99.8

100.0

99.0

100.4

101.0

103.5

103.5

Spain

100.0

101.7

101.0

95.8

96.3

97.0

96.2

94.7

95.2

96.0

Sweden

100.0

101.3

96.3

91.1

91.7

90.6

86.3

83.2

85.2

88.3

Switzerland

100.0

98.6

99.4

104.9

102.8

100.5

97.5

98.2

101.9

98.4

United Kingdom

100.0

98.8

105.6

110.3

98.4

93.3

94.9

94.4

94.6

98.8

United States

100.0

100.2

102.1

112.9

116.5

114.3

109.2

113.3

115.7

113.1

Azerbaijan

100.0

99.8

103.5

95.5

70.1

71.0

72.6

75.4

77.8

77.0

Belarus

100.0

107.8

119.6

110.1

101.4

98.9

97.1

99.3

93.0

89.7

Kazakhstan

100.0

100.6

93.3

93.2

70.9

76.7

75.8

72.4

71.8

70.6

Russian Federation

100.0

100.2

90.0

74.4

74.3

86.1

78.7

79.9

73.2

71.5

Ukrained

100.0

96.4

73.9

69.9

70.2

73.5

78.0

89.3

88.1

89.1

Economies in transition

Developing economies
Algeria

100.0

98.0

99.9

95.3

94.5

95.3

91.9

93.7

90.3

84.3

Argentina

100.0

90.9

74.4

87.5

75.8

78.9

52.7

38.4

38.8

37.1

Bangladesh

100.0

110.9

118.8

135.5

143.0

143.7

141.3

148.8

154.9

154.1

Brazil

100.0

94.6

92.5

75.5

78.8

84.9

67.7

61.1

45.0

42.2

Chile

100.0

99.0

89.7

87.1

87.9

90.5

88.9

81.4

73.2

75.0

China

100.0

104.5

107.8

115.7

109.9

105.5

105.4

104.1

106.1

109.9

Colombia

100.0

96.3

91.5

74.0

70.4

71.2

58.2

45.5

37.1

32.3

Dominican Republic

100.0

96.8

94.8

96.2

95.1

90.9

80.0

72.4

64.5

59.3

177

ANNEX TABLES

Table A.8

Selected economies: real effective exchange rates, broad measurementa, b (continued)
2012

2013

2014

2015

2016

2017

2018

2019

2020

2021c

Egypt

100.0

94.3

101.2

112.1

98.5

69.5

78.3

91.9

101.6

95.6

Ethiopia

100.0

99.9

99.8

108.3

109.8

106.9

108.8

121.0

118.5

117.8

Guatemala

100.0

102.0

106.5

114.5

121.1

127.1

122.5

119.8

120.4

114.8

Hong Kong SARe

100.0

97.5

97.0

102.5

106.7

109.1

105.4

108.8

108.3

103.0

India

100.0

99.6

101.5

107.8

108.4

111.3

105.9

108.4

106.1

105.7

Indonesia

100.0

95.3

89.4

89.9

93.7

94.2

88.7

92.1

90.5

89.1

Iran (Islamic Republic of)

100.0

88.6

72.7

76.6

78.1

77.2

72.5

99.4

135.7

166.3

Israel

100.0

106.5

107.7

106.3

108.2

112.7

111.2

113.6

116.1

120.0

Korea, Republic of

100.0

103.5

109.0

107.8

106.4

109.0

110.2

104.6

102.6

103.3

Kuwait

100.0

100.7

102.0

104.8

108.0

107.8

105.8

106.6

105.6

104.2

Malaysia

100.0

99.6

99.1

89.9

86.2

83.7

87.4

85.5

82.8

82.3

Mexico

100.0

105.6

104.4

92.4

79.9

81.2

59.5

57.9

52.3

55.2

Morocco

100.0

101.6

102.1

101.9

104.0

102.7

103.2

103.8

105.4

105.8

Nigeria

100.0

106.8

114.0

110.4

98.0

91.5

99.5

111.1

107.2

107.5

Pakistan

100.0

97.3

103.8

109.6

112.9

114.3

100.9

91.2

91.7

93.3

Peru

100.0

98.8

96.8

95.1

93.7

96.2

91.7

90.6

86.7

74.6

Philippines

100.0

102.3

101.4

105.4

101.9

96.4

94.3

98.4

104.3

105.1

Qatar

100.0

103.7

106.4

115.6

118.3

116.4

113.1

113.1

108.6

104.8

Saudi Arabia

100.0

103.0

104.5

112.2

114.6

111.2

111.1

109.5

111.8

108.9

Singapore

100.0

101.3

100.4

99.7

101.3

105.6

104.8

107.1

104.6

104.2

South Africa

100.0

88.9

83.8

81.1

76.6

85.6

86.8

81.1

69.3

74.9

Sri Lanka

100.0

104.5

105.8

110.5

107.6

107.1

98.9

91.3

91.8

85.2

Taiwan, Province of China

100.0

100.5

99.4

99.6

99.4

103.9

103.3

101.4

105.0

106.4

Thailand

100.0

104.0

100.4

100.3

97.1

99.5

103.0

108.2

105.4

100.2

Turkey

100.0

98.9

94.6

92.4

91.1

80.9

68.6

67.5

60.0

58.1

United Arab Erirates

100.0

101.1

103.7

113.4

115.3

115.1

117.0

113.0

106.9

100.8

Uruguay

100.0

106.9

103.4

104.5

103.6

106.5

88.5

72.0

61.9

54.6

Viet Nam

100.0

105.1

107.8

112.2

114.6

113.3

112.8

114.7

116.8

112.5

Sources: UN DESA, Bank for International Settlements, IMF International Financial Statistics.
a 2012=100.
b CPI-based indices. The real effective exchange rate gauges the effect on international price competitiveness of currency changes and inflation differentials. A rise in
the index implies a fall in competitiveness and vice versa.
c Average for the first ten months.
d Data for Ukraine excludes the temporarily occupied territory of the Autonomous Republic of Crimea and Sevastopol.
e Special Administrative Region of China.

178

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.9

Free market commodity price indices
Index: Year 2015 = 100

Non-fuel commodities

Food

Tropicalbeverages

Vegetableoilseeds andoils

Agricultural
raw materials

Minerals andmetalsAll groups

All groups
excluding fuels

Fuels

2012
2013
2014
2015
2016

127
120
118
100
104

112
90
111
100
97

152
136
123
100
107

143
131
115
100
100

153
138
121
100
105

177
170
157
100
91

145
131
119
100
104

197
194
180
100
83

2017

103

94

106

105

116

106

110

104

2018
2019
2020
2018
I
II
III
IV
2019
I
II
III
IV
2020
I
II
III
IV
2021
I
II
III

96
98
102

86
81
85

100
93
106

103
99
97

118
125
145

123
114
96

109
112
124

133
116
79

100
100
92
94

90
90
80
82

107
106
95
92

105
105
102
100

124
121
113
114

120
126
126
121

114
112
104
105

124
135
140
131

96
97
98
102

79
79
80
87

94
89
92
98

101
101
97
97

120
123
130
127

115
117
112
113

109
110
114
114

119
121
110
112

103
99
100
104

87
83
86
85

99
92
104
127

97
91
96
105

129
134
155
160

101
82
98
105

116
116
130
137

91
61
78
85

113
122
123

91
99
111

150
163
159

110
110
110

170
184
180

128
140
149

147
158
157

115
128
145

Sources: UNCTAD, Monthly Commodity Price Bulletin; UN DESA.

179

ANNEX TABLES

Table A.10

World oil supply and demand
2013

2014

2015

2016

2017

2018

2019

2020

2021a

Developed economies

89.3
18.1

91.7
20.1

94.3
21.4

94.7
21.0

95.5
22.0

98.2
24.7

97.1
26.5

94.1
25.6

92.5
25.8

Economies in transition

13.9

14.0

14.1

14.3

14.4

14.7

15.0

13.5

13.8

Developing economies

World oil supplyb,c(millions of barrels per day)

55.1

55.3

56.6

57.1

56.8

56.5

53.3

52.6

50.6

OPEC

37.7

37.7

39.1

39.6

39.5

39.5

36.7

32.6

30.9

Non-OPEC

17.4

17.6

17.6

17.5

17.2

16.9

16.5

20.1

19.7
2.4

2.2

2.2

2.2

2.3

2.3

2.3

2.4

2.4

Global biofuels e

2.0

2.2

2.3

2.4

2.4

2.6

2.8

2.8

2.8

World total demandf

92.0

93.2

95.0

96.1

97.9

99.2

100.5

92.1

97.4

OPEC basketg

105.9

96.3

49.5

40.8

52.4

69.8

64.1

41.5

69.4

Brent oil

108.9

98.9

52.3

43.7

54.2

71.2

64.3

41.7

71.6

Processing gainsd

Oil prices (dollars per barrel)

Sources: UN DESA, International Energy Agency; U.S. Energy Information Administration; and OPEC.
a Partly estimated.
b Including global biofuels, crude oil, condensates, natural gas liquids (NGLs), oil from non-conventional sources and other sources of supply.
c Totals may not add up because of rounding.
d Net volumetric gains and losses in the refining process and marine transportation losses.
e Global biofuels comprise all world biofuel production including fuel ethanol from Brazil and the United States.
f Measured as deliveries from refineries and primary stocks, comprises inland deliveries, international marine bunkers, refinery fuel, crude for direct burning,
oil from non-conventional sources and other sources of supply. Includes Biofuels.
g As of 6 March 2020: The basket price excludes the Ecuadorean crude "Oriente".

180WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.11

World tradea: Changes in value and volume of exports and imports, by major country group
Annual percentage change

2013

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

World

2.6

1.5

-11.1

-1.7

10.7

9.0

-1.6

-11.4

22.2

7.4

4.7

Developed economies

3.1

3.1

-9.6

0.4

8.8

8.9

-1.4

-10.6

18.9

8.2

4.4

Northern America

2.7

3.6

-6.3

-1.8

7.0

6.5

-0.5

-15.5

16.1

9.7

5.0

Europe

5.0

3.0

-10.8

1.5

9.6

9.9

-1.9

-8.0

19.8

7.7

4.2

Developed Asia and the Pacific

-6.6

1.8

-11.7

3.4

10.5

7.3

-1.2

-12.2

21.1

6.2

5.0

-0.5

-5.7

-28.7

-11.7

21.2

21.0

-2.0

-18.5

35.1

8.2

3.1

South-Eastern Europe

15.5

4.1

-10.0

9.3

15.1

16.4

1.2

-9.5

27.7

6.8

3.2

Commonwealth of Independent States andGeorgiad

-1.1

-6.1

-29.5

-12.8

21.6

21.3

-2.2

-19.1

35.7

8.3

3.1

2.3

0.2

-11.3

-3.7

12.5

8.2

-1.8

-11.9

25.7

6.3

5.2

Latin America and the Caribbean

-0.2

-4.0

-12.7

-0.8

20.0

-3.8

1.0

-14.6

21.2

5.2

5.1

Africa

-10.3

-3.5

-27.9

-7.6

17.0

14.6

-3.3

-19.7

33.9

5.3

6.8

East Asia

5.1

3.0

-5.9

-3.9

10.4

8.9

-1.6

-9.2

27.1

6.9

4.9

South Asia

3.2

-4.3

-9.1

2.3

13.4

6.9

-4.9

-6.6

20.0

6.4

5.3

Western Asia

0.8

-2.9

-24.1

-6.8

13.2

15.1

-2.7

-20.8

23.1

4.4

5.7

World

2.7

2.0

-9.8

-2.2

14.2

10.1

412.3

-35.5

6.7

10.1

5.6

Developed economies

1.6

3.0

-9.9

-0.4

8.7

9.5

-0.8

-10.4

23.4

5.9

3.4

Northern America

-0.1

3.6

-4.2

-2.2

6.8

6.9

-0.5

-11.2

21.4

3.9

4.0

Europe

3.6

2.7

-11.5

1.6

10.2

10.7

-0.8

-8.7

24.0

6.8

3.3

Asia and Oceaia

-5.4

1.7

-16.8

-4.1

9.4

10.2

-2.4

-13.3

26.1

2.8

2.1

Economies in transition

3.3

-9.1

-28.3

-4.8

19.0

9.4

4.4

-13.2

27.0

7.0

2.9

4.8

4.0

-13.8

5.4

14.6

16.6

2.4

-8.7

23.9

6.1

3.5

Dollar value of exports

Economies in transition

Developing economies

Dollar value of imports

South-Eastern Europe
Commonwealth of Independent States andGeorgiad

3.2

-9.9

-29.3

-5.7

19.4

8.7

4.6

-13.7

27.3

7.1

2.8

4.2

1.7

-8.2

-4.3

21.5

10.9

934.7

-38.6

3.7

11.0

6.1

Latin America and the Caribbean

4.8

-0.1

3.5

-9.7

73.7

12.6

4105.1

-40.9

0.2

11.6

6.1

Africa

5.2

2.1

-16.0

-7.6

4.7

11.2

0.4

-10.6

27.3

4.9

7.7

East Asia

4.9

2.5

-10.2

-2.5

12.6

12.5

-3.1

-7.4

33.8

6.5

4.5

South Asia

-3.6

-3.9

-7.7

1.0

17.8

7.5

-5.0

-12.2

39.4

10.4

14.2

Western Asia

5.7

4.0

-8.2

-6.6

8.0

2.1

-2.7

-9.7

26.0

6.9

7.3

World

2.5

3.8

3.0

2.3

5.6

4.3

1.2

-8.7

11.0

6.0

4.0

Developed economies

2.6

4.3

4.6

2.8

5.0

3.5

1.8

-10.1

9.2

7.0

3.6

Northern America

2.9

4.3

0.8

0.6

3.6

3.0

0.2

-12.9

8.1

8.1

4.0
3.3

Developing economies

Volume of exports

Europe

2.8

4.2

6.5

3.6

5.3

3.7

2.6

-8.3

9.7

6.4

Developed Asia and the Pacific

1.9

8.5

4.1

2.9

6.0

3.4

0.1

-11.3

11.6

5.9

4.5

2.5

-0.8

1.8

3.2

5.4

5.5

2.3

-6.2

10.6

5.6

3.1

11.5

5.3

8.2

10.8

9.0

7.8

5.8

-10.6

12.9

6.3

2.6

Economies in transition
South-Eastern Europe
Commonwealth of Independent States andGeorgiad
Developing economies
Latin America and the Caribbean

2.1

-1.1

1.5

2.8

5.2

5.4

2.1

-5.9

10.4

5.6

3.1

2.3

3.6

1.0

1.5

6.3

5.3

0.2

-7.0

13.4

4.9

4.5

1.1

1.3

4.7

1.8

3.7

3.6

0.3

-9.0

8.5

2.3

3.5

181

ANNEX TABLES

Table A.11

World tradea: Changes in value and volume of exports and imports by major country group (continued)
Annual percentage change

2013

2014

2015

2016

2017

2018

2019

2020

2021b

2022c

2023c

Africa

-26.3

-6.6

-2.9

2.7

13.0

4.4

1.9

-15.5

15.3

2.8

5.2

East Asia

6.8

5.8

1.0

0.8

7.2

4.8

0.7

-5.4

15.9

6.0

4.5

South Asia

4.2

3.0

-1.5

6.6

5.8

6.4

-4.1

-4.2

9.8

4.3

4.2

Western Asia

2.1

0.9

0.6

1.6

1.9

8.7

-0.3

-10.4

6.2

2.2

5.4

World

3.0

3.1

2.0

1.5

5.8

4.7

1.1

-7.9

10.9

5.3

4.1

Developed economies

2.0

4.6

5.7

3.0

4.7

3.9

2.8

-9.3

7.8

4.9

2.9

Northern America

1.4

4.7

4.4

1.2

4.5

4.0

1.0

-9.3

6.2

3.0

3.5

Europe

2.2

4.6

7.3

4.5

5.1

3.9

4.1

-8.2

8.4

5.8

2.8

Developed Asia and the Pacific

1.9

5.7

0.9

-0.6

4.6

4.3

0.5

-9.5

8.3

2.2

2.0

2.8

-6.3

-16.7

-0.3

12.9

5.1

5.5

-10.9

10.3

5.2

2.4

Volume of imports

Economies in transition
South-Eastern Europe

3.0

6.5

3.5

8.1

9.0

8.4

7.2

-8.7

9.0

4.8

2.9

Commonwealth of Independent States andGeorgiad

2.8

-7.1

-18.2

-1.0

13.3

4.8

5.3

-11.1

10.5

5.3

2.3

Developing economies

4.2

1.9

-1.2

-0.5

6.7

5.8

-1.5

-5.8

15.1

5.8

5.6

Latin America and the Caribbean

-0.6

-4.9

-6.6

-11.2

1.4

4.0

-3.1

-13.7

12.7

4.7

3.7

Africa

6.5

-1.4

-3.4

-0.7

5.8

6.4

2.0

-7.0

7.6

2.8

6.6

East Asia

7.2

4.9

1.3

3.1

7.8

6.5

-1.5

-3.2

17.4

5.9

4.3

South Asia
Western Asia

-6.0
5.7

-1.3
3.9

-3.9
-0.9

2.5
-3.2

13.5
4.4

7.0
2.9

-1.0
-1.6

-8.3
-7.3

15.9
10.5

9.9
5.6

14.3
6.9

Source: UN DESA.
a Includes goods and services.
b Partly estimated.
c Baseline scenario forecasts, based in part on UN DESA World Economic Forecasting Model.
d Georgia officially left the Commonwealth of Independent States on 18 August 2009. However, its performance is discussed in the context of this group of countries
for reasons of geographic proximity and similarities in economic structure.

182

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.12

Balance of payments on current accounts, by country or country group, summary table
Billions of dollars

2012

2013

Developed economies-141.1

24.4

Japan
United States
EuropeEurope excluding the United Kingdom
Other Europeb
Economies in transition
South-Eastern Europe
Commonwealth of Independent Statesand Georgiac
Developing economies
Net fuel exporters
Net fuel importers
Latin America and the Caribbean
Net fuel exporters
Net fuel importers
AfricaNet fuel exporters
Net fuel importers
Western Asia
Net fuel exporters
Net fuel importers
East and South Asia
Net fuel exporters
Net fuel importers
World residuald

59.7-418.1
356.3
450.9
44.2
59.4
-8.4

46.0
-339.5
433.2
569.4
0.0
11.5
-5.6

69.6

18.1

507.7
420.8
86.9
-148.8-3.4-145.5
-47.1
34.5
-81.7
336.8
399.8
-63.0
272.4
-10.2
282.6
426.0

370.3
348.2
22.1
-172.5-2.3-170.2
-64.1
15.8
-79.8
284.5
348.4
-63.9
287.8
-13.7
301.4
406.2

2014

2015

2016

2017

2018

2019

2020

2021a

-9.4

10.8

113.5

228.4

147.4

97.4

-86.6

-57.1

36.8
-370.0
416.7
566.4
-35.2
51.1
-6.1

136.4
-408.9
399.6
547.0
-43.3
47.7
-3.8

197.8
-397.6
405.9
552.8
-66.2
-4.4
-3.9

203.5
-361.7
474.3
574.7
-26.8
13.4
-5.1

177.8
-438.2
486.2
591.5
-20.6
105.8
-5.1

176.5
-472.1
425.0
512.6
-25.5
43.3
-6.5

164.4
-616.1
360.5
461.1
-64.8
22.9
-5.9

176.9
-796.1
502.5
607.1
-13.9
82.5
-6.2

58.9

53.3

1.4

19.8

112.0

50.8

30.8

90.5

384.3
198.2
186.1
-185.9-11.3-174.6
-91.9
-25.5
-66.4
200.9
243.6
-42.7
432.4
-8.6
441.0
426.0

178.2
-167.0345.3-172.1-37.5-134.6-143.6
-72.9
-70.7
-72.0
-47.0
-25.0
543.6
-9.6
553.3
236.6

179.6
-108.7288.3-100.6-18.2-82.4-112.0
-42.0
-70.0
-83.2
-51.4
-31.8
459.9
2.9
457.0
288.7

277.9
15.6
262.3
-94.1
-2.7
-91.4
-84.1
-19.9
-64.2
-14.3
32.2
-46.4
405.5
6.0
399.4
519.7

165.2
132.9
32.4
-140.0-6.6-133.4
-80.2
-13.1
-67.1
122.0
151.8
-29.8
172.6
0.7
171.8
418.4

216.9
27.6
189.4
-102.3-10.0-92.3-100.0
-34.9
-65.1
100.0
95.3
4.7
272.1
-22.8
294.9
357.6

427.1
-82.1
509.3
2.0
-9.1
11.1
-89.3
-45.2
-44.1
-47.7
-25.7
-22.0
576.4
-2.2
578.6
363.5

585.2
86.4
498.8
-27.4
-9.3
-18.2
-80.9
-32.0
-48.9
109.1
111.6
-2.4
543.9
16.2
527.8
610.7

Sources: International Monetary Fund (IMF), World Economic Outlook database, October 2022
a Partially estimatedb Other Europe consists of Iceland, Norway, Switzerland and the United Kingdom (Table A).
c Georgia officially left the Commonwealth of Independent States on 18 August 2009. However, its performance is discussed in the context of this group of countries
for reasons of geographic proximity and similarities in economic structure.
d Statistical discrepancy.
Other Notes: Africa includes South Sudan; Western Asia excludes the State of Palestine; and East Asia excludes Democratic People’s Republic of Korea.

183

ANNEX TABLES

Table A.13

Net ODA from major sources, by typeODA as apercentage
of GNI

Growth rate of ODA(2018 prices and exchange rates)

Total ODA
(millionsof dollars)

Bilateral

Multilateral

Total

Total
(United Nations& other)

UnitedNations

Other

161027

70.0

30.0

5.1

24.9

93974
1316
2341
2638

63.3
42.7
43.5
64.1

36.7
57.3
56.5
35.9

4.8
3.2
12.7
10.2

31.9
54.2
43.9
25.7

0.47
0.60
0.74
0.13

1275
15833
28886
238

50.6
66.0
77.7
1.9

49.4
34.0
22.3
98.1

13.5
2.1
2.8
1.5

36.0
31.8
19.5
96.6

0.31
0.23
1.02
0.59
0.16
0.22
1.13
0.19
0.30
0.26
0.27
1.11
0.50
0.72
0.16

972
4348
450
5359
364
2722
6261
2563
4896
13666
531
4198
3722
19245
35124

52.4
29.4
67.6
66.8
31.6
27.6
55.8
76.3
75.4
75.0
81.6
75.2
76.5
63.2
82.5

47.6
70.6
32.4
33.2
68.4
72.4
44.2
23.7
24.6
25.0
18.4
24.8
23.5
36.8
17.5

11.9
4.7
13.3
9.8
3.5
4.0
11.6
7.1
5.9
4.7
9.7
9.7
7.3
3.8
4.9

35.7
65.9
19.0
23.4
65.0
68.4
32.6
16.6
18.7
20.3
8.7
15.1
16.2
33.0
12.6

1999–
2008

2009–
2017

2018

2019

2020

2020

2020

Total DAC countries

4.9

5.3

-2.3

-0.5

7.1

0.32

Total EU
Austria
Belgium
Denmark

4.8
4.7
6.3
0.2

5.4
4.6
9.1
0.2

-0.5
-12.4
0.5
0.1

-1.5
9.0
-2.5
3.4

7.6
4.6
3.5
0.6

0.54
0.31
0.48
0.73

FinlandFrance aGermany
Greece

7.4
3.5
4.1
6.8

7.4
3.9
5.0
4.9

-14.9
7.2
-3.6
-11.4

21.0
-2.8
-3.1
33.2

6.4
26.6
16.0
-36.2

Ireland
Italy
Luxembourg
Netherlands
Portugal
Spain
SwedenAustralia
CanadaJapan
New Zealand
NorwaySwitzerland
United Kingdom
United States

10.6
-1.0
7.1
2.5
1.3
9.4
7.8
4.2
3.1
-3.0
4.2
3.8
5.1
8.5
9.1

8.0
0.4
6.5
2.3
3.1
8.8
6.5
5.4
4.5
-2.0
3.2
3.5
3.4
10.9
9.0

6.2
-17.7
4.0
5.6
-4.5
-4.5
7.1
4.0
5.7
-13.5
25.5
-4.8
-2.9
1.5
-5.0

6.9
-12.5
1.6
-3.5
2.0
8.8
-8.1
-4.4
-1.8
14.3
2.4
9.7
1.6
1.8
-4.1

-4.1
-1.0
-9.2
-2.8
-8.9
-2.2
15.5
-10.6
9.2
13.1
-5.2
8.4
13.9
-6.6
5.3

Donor group or country

Percentage distribution of ODA by type, 2020

Source: UN DESA, based on OECD/DAC online database.
a Excluding flows from France to the Overseas Departments, namely Guadeloupe, French Guiana, Martinique and Réunion.

184

WORLD ECONOMIC SITUATION AND PROSPECTS 2022

Table A.14

Total net ODA flows from OECD Development Assistance Committee countries, by typeNet disbursements at current prices and exchange rates (billions of dollars)
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Official Development Assistance
Bilateral official development assistancein the form of:Technical cooperation

135.1
94.8

127.0
88.5

134.8
93.5

137.5
94.8

131.6
94.2

144.9
103.1

147.2
105.6

150.1
105.2

146.5
103.3

161.0
112.7

18.0

18.2

16.9

17.3

14.9

15.7

16.5

15.8

16.9

…

Humanitarian aid
Debt forgiveness
Bilateral loans
Contributions to multilateral institutionsaof which are:UN agencies
EU institutions
World Bank
Regional development banks
OthersMemorandum item
Bilateral ODA to least developed countries

9.7
6.3
1.9
40.3

8.5
3.3
2.6
38.6

10.5
6.1
1.4
41.4

13.1
1.4
5.3
42.7

13.4
0.3
6.0
37.3

14.4
2.1
5.8
41.8

16.1
0.4
6.6
41.6

16.0
0.3
6.3
44.9

16.5
0.1
6.3
43.2

…
…
...
48.3

6.5
13.8
10.2
4.1
4.4

6.6
12.0
8.6
3.9
6.4

6.9
12.8
9.4
3.9
7.2

6.8
13.3
9.8
4.0
7.5

6.1
11.9
8.6
3.2
6.7

5.9
13.8
8.8
4.6
7.8

6.2
13.9
8.2
4.2
8.1

6.6
15.2
11.3
4.2
6.3

7.6
15.5
9.3
3.9
6.0

8.2
16.3
8.7
2.9
…

30.7

27.4

29.9

26.4

25.0

24.6

27.4

27.8

28.2

…

Source: UN DESA, based on OECD/DAC online database.
a Grants and capital subscriptions. Does not include concessional lending to multilateral agencies.

185

ANNEX TABLES

Table A.15

Commitments and net flows of financial resources, by selected multilateral institutions
Billions of dollars

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Resource commitments
Financial institutions, excludingInternational Monetary Fund (IMF)
Regional development banks bWorld Bank Group cInternational Bank for Reconstruction
and Development (IBRD)
International Development Association(IDA)
International Financial Corporation(IFC)dInternational Fund for
Agricultural Development (IFAD)
International Monetary Fund (IMF)

163.8

189.8

130.8

185.0

119.9

245.4

256.7

224.8

225.0

247.1

106.8
46.9
59.9

96.5
43.0
53.5

98.8
45.8
53.0

99.2
41.1
58.1

99.9
46.9
53.0

106.9
49.8
57.0

108.0
54.0
54.0

114.6
56.0
58.6

129.3
59.8
69.5

143.7
56.5
87.2

26.7

20.6

15.2

18.6

23.5

29.7

22.6

23.0

28.0

30.5

16.3

14.8

16.3

22.2

19.0

16.2

19.5

24.0

30.4

36.0

16.9

9.2

11.0

10.0

10.5

11.1

11.9

11.6

11.1

20.7

1.0

1.0

0.8

0.7

1.3

0.8

1.3

1.3

1.7

0.8

45.7

82.5

19.6

72.7

6.2

123.9

132.9

89.9

75.6

73.5

United Nations operational agencies e

11.3

10.8

12.4

13.1

13.7

14.7

15.8

20.4

20.1

29.8

Net flows

78.7
38.0
10.5
27.6

35.1
26.3
8.6
17.7

8.8
22.2
5.7
16.5

-5.1
25.0
11.2
13.8

17.7
35.5
15.4
20.1

32.2
33.8
14.2
19.6

36.3
36.6
13.1
23.6

82.6
46.8
14.2
32.7

62.8
49.4
15.2
34.2

84.4
61.1
24.0
37.1

17.2

8.0

7.8

6.4

9.0

10.0

13.2

17.4

17.4

16.9

9.1

7.8

7.0

7.4

9.9

8.8

8.8

14.7

15.3

19.6

1.2

1.9

1.6

0.1

1.3

0.8

1.6

0.6

1.6

0.6

0.3
40.7

0.3
8.9

0.2
-13.4

0.2
-30.1

0.2
-17.9

0.2
-1.5

0.3
-0.4

0.3
35.8

0.3
13.4

0.2
23.3

a

Financial institutions, excluding IMF
Regional development banks bWorld Bank Group cInternational Bank for Reconstruction
and Development (IBRD)
International Development Association(IDA)
International Financial Corporation(IFC)
International Fund for Agricultural
Development (IFAD)
International Monetary Fund (IMF)

Source: Annual reports of the relevant multilateral institutions, various issues.
a Loans, grants, technical assistance and equity participation, as appropriate; all data are on a calendar-year basis.
b African Development Bank (AfDB), Asian Development Bank (ADB), Caribbean Development Bank (CDB), European Bank for Reconstruction and Development (EBRD),
and the Inter-American Development Bank (IDB).
c Data is for fiscal year.
d Effective 2012, data does not include short-term finance.
e United Nations Development Program (UNDP), United Nations Population Fund (UNFPA), United Nations Children's Fund (UNICEF), and the World Food Programme(WFP).

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