Strong GDP growth
being forecasted by UN
Economy to grow 14 percent
after 31 contraction in 2020
The United Nations (UN) has estimated that GDP has shrunk by 31 percent in 2020. It expects it to grow again by 14 percent this year, according to its recently published ‘World Economic Situation Prospects 2021’ report.
The GDP contraction for 2020, as estimated by the UN, is deeper than previous estimates by the World Bank, the International Monetary Fund (IMF), and the Institute of International Finance (IIF).
“The impacts [of the Port Explosion] are further deepening the double-digit contraction in real GDP growth resulting from the pre-existing economic and financial crisis and the repercussions of Covid-19,” the UN said. “The crisis does, however, present a unique opportunity to implement a number of required policy and social reforms,” it said.
The first reform measure proposed by the report is establishing a national solidarity fund to address the humanitarian crisis and close the poverty gap. The headcount poverty rate is likely to have surged to 55 percent by May 2020 while extreme poverty would have reached 23 percent. “To reduce poverty, progressive income taxation should be introduced and taxes increased and this should be accompanied by political will and strong institutional capacity so as to ensure societal solidarity,” the report said.
The second measure recommended by the UN is strengthening the country’s food and health security and social protection, “which urgently requires the support of the international community.”
The government also has to enact the required economic governance reforms and curb rent-seeking activities while enhancing transparency and accountability.
“Greater transparency with respect to income and wealth would allow the ministries of finance and social affairs as well as related institutions to improve poverty-targeting practices,” the report said.
Date Posted: Feb 01, 2021