Global Economic Recovery: What Are the Priorities?By Sofía Hanna | Wed, 05/25/2022 - 17:44
During the 11th anniversary of the establishment of the Pacific Alliance (PA), the embassies of Chile, Colombia, Peru, and Mexico joined for a discussion on what their role in a sustainable and inclusive economic recovery will be. Panelists emphasized the PA’s priorities toward recovery, considering the pro tempore Mexican presidency.
The main points discussed included the promotion of e-commerce; greater access to goods and services to the benefit of small and medium-sized enterprises (SMEs), “notably those led by women, as they have greater potential to insert themselves in the trade dynamics between the four countries,” and streamlining the processes involved in the flow of goods. Developing a successful mechanism of regional integration and seizing the existing opportunities to expand the ties with Canada were the main takeaways of this event.
Currently, global growth is projected to slow down, from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term, according to the International Monetary Fund’s statistics and projections. Inflation, an addition to the world’s dilemma, is expected to remain high for longer than what was previously forecast, driven by war-induced commodity price increases and broadening price pressures. “For 2022, inflation is projected at 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected in January,” stated IMF.
Global growth prospects have weakened significantly, but leaders, including the PA members, have highlighted the importance of new and developing international relations, given how this can add to the economic recovery. However, aspects such as tight budgets in developed countries will increase borrowing costs, undermine debt sustainability and will further constrain the fiscal space to support the full recovery of developing economies.
Regarding sustainability, the war in Ukraine and its effects on energy and commodity prices may also undermine climate action. However, there are ways to work around that: “Oil and gas prices are an opportunity for countries to resolve their energy and food security concerns through the accelerated adoption of renewables and improving systemic efficiencies, aligning with overall sustainable development objectives and truly contributing the fight against climate change,” as stated by the UN.