United Nations Secretary-General Antonio Guterres presented a sobering view of the global economy at Davos 2023, warning that the world is heading towards a Category 5 economic hurricane.
“We are looking into the eye of a Category 5 hurricane. Our world is in a perfect storm on a number of fronts,” Guterres said at the World Economic Forum on Wednesday. “Start with the global economic crisis in the short term. The outlook is bleak, as we all know. Many parts of the world are facing a recession and the entire world is facing a slowdown. We are seeing rising inequality and rapidly unfolding costs of living. The crisis affects women and girls the most. Supply chain disruptions and an energy crisis and high prices.”
Guterres also made clear his concerns about the “perfect storm” hitting the world on Wednesday on “Mornings with Maria”.
“I’m concerned about the fact that we have a bunch of things that are intertwined and that have negative synergies,” he said.
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The war in Ukraine, skyrocketing food and energy prices, climate change and increasing wealth inequality are factors that Guterres fears are “creating a situation” that provides “a clear perspective on recession”.
In addition, Guterres pointed to economies outside the United States, Europe and Asia that are burdened with economic difficulties.
“Interest rates are skyrocketing in the global south. Countries are on the verge of default. They don’t have resources because they can’t print money like the United States did, like Europe did during the coronavirus outbreak,” Guterres said. “They don’t have access to concessional financing because many of them are from middle-income countries. Look at the small island developing states, the Caribbean islands. They’ve been living off tourism. Tourism has been gone for two years, but they’re middle-income countries, they don’t have debt to live on,” And they didn’t have concessional financing. So we have it in the Global South, and it’s a situation where people are suffering and we need to understand that.”
Guterres called for increased “mechanisms of global solidarity” in light of the widespread economic hardship.
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When asked what the UN could do to combat the economic hurricane, Guterres floated a UN proposal emphasizing global stimulus to tackle economic problems as well as tools abroad for a “just transition” from fossil fuel dominance to clean energy.
“Our proposal is that there be a global stimulus, a global stimulus that can fix economies, a global stimulus that can meet the challenges of the world’s poorest, and at the same time create the funds needed to achieve a fair transition in terms of climate change,” Guterres told host Maria Bartiromo.
“We need to move from the dominance of fossil fuels to the dominance of renewables. But we need to do it in a fair way,” he added. “We only consider the people who will be negatively affected in areas where fossil fuel dominance is in. Looking at training and looking for new jobs, regions need to invest. This transition needs to be managed well, not like a rust belt of the past in which the transition from The heavy industry in the United States, Europe and other parts of the world is also correct.
Guterres also made it clear that the United Nations wants “higher commitments” from China to move more quickly in reducing its domestic emissions to help global efforts to combat climate change. However, he noted that technology assistance may be needed to help China achieve faster emissions reductions.
“We need to make sure that China reduces emissions. This is vital for the world,” Guterres said. “But China needs some technological support, I wouldn’t say financial, but technological support to be able to do that because they have old-fashioned industry in a number of areas and more reliance on coal.”
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Given the global economic outlook and climate concerns, Guterres added that it is “absolutely necessary” for “serious” negotiations between the West and China.
“With the climate, with the slowdown in the global economy, with the dire situation of the developing world, with the return of epidemic risks, I think it is absolutely necessary to have serious negotiations at the table where everything is laid out very clearly between China and the Western world.”