UN Secretary-General Antonio Guterres outlines the ‘perfect storm’ hitting the global economy and shares what the UN is doing to help at Davos 2023.
United Nations Secretary-General Antonio Guterres offered a sobering outlook on the global economy at Davos 2023, warning the world is heading into the eye of a Category 5 economic hurricane.
“We are looking in the eye of a Category 5 hurricane. Our world is being hit by a perfect storm on multiple fronts,” Guterres said at the World Economic Forum on Wednesday. “Start with the short-term global economic crisis. The prospects, as we all know, are bleak. Many parts of the world are facing a recession and the whole world is facing a slowdown. And we see rising inequalities and a rapidly evolving cost of living crisis that affects women and girls the most. Supply chain disruptions and energy shortages, rising prices.”
Guterres detailed his fears about the “perfect storm” hitting the world on Wednesday’s “Morning with Maria.”
“I worry about the fact that we have a combination of things that are all interlocked and have negative synergies,” he said.
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United Nations Secretary-General Antonio Guterres said he was concerned about the “perfect storm” that would hit the global economy in Mornings with Maria. (AP Photo/Mary Altaffer, File/AP Newsroom)
The war in Ukraine, skyrocketing food and energy prices, climate change and rising wealth inequality were some of the factors Guterres feared are “creating a situation” that offers a “clear recession perspective.”
In addition, Guterres pointed to economies beyond the US, Europe and Asia that are beset with economic difficulties.
“Interest rates in the Global South are skyrocketing. The countries are on the verge of default. They have no resources because they couldn’t print money like the US did, like Europe did during COVID,” Guterres said. “They don’t have access to concessional finance because a lot of them are middle-income countries. Look at small island developing countries, the Caribbean islands. They made their living from tourism. Tourism stopped two years ago, but being middle-income countries, they didn’t have debt to live on, they didn’t have concessional financing. So we have a situation in the Global South where people are suffering and we need to understand that.”
In view of the widespread economic suffering, Guterres called for the “mechanisms of global solidarity” to be strengthened.
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Asked what the UN can do to combat the economic hurricane, Guterres presented a UN proposal that would provide a global stimulus to tackle economic problems, as well as tools for a “just transition” from fossil fuel dominance to clean energy stressed overseas.
“Our proposal is a global stimulus, a global stimulus capable of rehabilitating economies and a global stimulus capable of addressing the challenges of the world’s poorest while creating the means necessary for… a just transition in terms of climate change,” Guterres told host Maria Bartiromo.
“We need to move from fossil fuel dominance to renewable energy dominance. But we have to do it fairly,” he added. “We only consider the people who will be negatively affected in the areas that live predominantly on fossil fuels. If you are looking for education, if you are looking for new jobs, the regions have to be invested. This transition needs to be managed well, not like the rust belts of the past where the transition from heavy industry in the United States, in Europe, in other parts of the world hasn’t been managed properly either.”
Guterres also said the UN wanted “higher commitments” from China to cut its domestic emissions faster to help global efforts to tackle climate change. However, he noted that technological help may be needed to help China reduce emissions faster.
“We must ensure that China reduces emissions. It’s 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 a much more old-fashioned industry in a number of areas and they rely a lot more on coal.”
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Amid the global economic outlook and climate fears, Guterres added that it was “absolutely imperative” for “serious” negotiations to take place between the West and China.
“Given the climate, the slowdown in the global economy, the dramatic situation in developing countries and the threat of another pandemic, I think it is absolutely essential to bring serious negotiations to the table, where everything is set out very clearly, between China and the western world. “