United Nations Secretary-General Antonio Guterres offered a sobering look at the global economy at Davos 2023, warning that the world is heading for a Category 5 economic hurricane.
“We are looking into the eye of a Category 5 hurricane. Our world is being ravaged on a number of fronts by a perfect storm,” Guterres said Wednesday at the World Economic Forum. “Start with the short term, the global economic crisis. As we all know, the outlook is bleak. Many parts of the world are facing a recession and the whole world is facing a slowdown. And we are seeing rising inequality and the rapidly rising cost of living crisis that affects women and girls the most. Supply chain disruptions and an energy crisis, driving up prices.”
Guterres further elaborated on his fears about the “perfect storm” hitting the world on “Mornings with Maria” Wednesday.
“I worry about the fact that we have a combination of things that are all connected and have negative synergies,” he said.
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The war in Ukraine, skyrocketing food and energy prices, climate change and increased wealth inequality were some of the factors that, according to Guterres, “create a situation” that offers a “clear prospect of recession.”
In addition, Guterres pointed to economies outside the US, Europe and Asia that are suffering from economic hardship.
“Interest rates are extremely rising in the global south. Countries are on the brink of default. They have no resources because they couldn’t print money like the US did, like Europe did during the COVID,” Guterres said. “They don’t have access to concessional financing because many of them are middle-income countries. Look at small island developing states, the Caribbean islands. They lived off tourism. Tourism has been over for two years, but since they are middle-income countries, they had no debt to live on, they had no concessional funding. So we have a situation in the Global South where people are suffering and we need to understand that.”
Guterres called for strengthening the “mechanisms of global solidarity” in the face of widespread economic suffering.
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When asked what the UN can do to combat the economic hurricane, Guterres presented a United Nations proposal that emphasizes a global stimulus to address economic woes, as well as tools to facilitate a “just transition” from dominance from fossil fuels to clean energy.
“Our proposal is to have a global stimulus, a global stimulus capable of restoring the economies, and a global stimulus capable of addressing the challenges of the world’s poorest, while increasing the funds necessary for a just transition in relation to climate change,” Guterres told host Maria Bartiromo.
“We need to move from a fossil fuel dominance to a renewable energy dominance. But we need to do that in an equitable way,” he added. “We only consider the people who will be negatively affected in the areas living with a fossil fuel predominance. Looking at education, looking for new jobs, the regions need to be invested. This transition needs to be well managed, not like the rust belt of the past in which the transition of heavy industry in the United States, in Europe, in other parts of the world was also not properly met.”
Guterres also explained that the UN wants “higher commitments” from China to move faster in reducing its domestic emissions to help the global effort to fight climate change. However, he noted that technology assistance may be needed to help China achieve faster emissions reductions.
“We need to get China to reduce emissions. This is vital for the world,” Guterres said. “But China needs some technology support, I wouldn’t say financial, but technology support to be able to do it because they have a much more old-fashioned industry in some areas and are much more dependent on coal.”
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Given the global economic outlook and climate fears, Guterres added that it is “absolutely essential” to have “serious” negotiations between the West and China.
“With the climate, with the slowdown in the global economy, with the dramatic situation in the developing world, with the risks of a pandemic returning, I think it is absolutely essential to have serious negotiations on the table where everything becomes very clear between China and the Western world.”