New research indicates that the pace of global economic expansion in the 21st century is expected to be more sluggish than previously anticipated, which holds implications for our capacity to tackle climate change in the forthcoming decades.
A recent study, which examines the future economic trajectories of four income categories of countries over the next century, reveals that growth will occur at a slower pace than previously predicted. Developing nations will require more time to narrow the wealth disparity and approach the income levels of more affluent countries.
Surprisingly, what economists had regarded as the most unfavorable possibility for global economic growth could, in reality, represent the most favorable outcome, as highlighted by a fresh investigation conducted by the University of Colorado at Boulder.
Decelerated growth
The implications of these findings suggest that governments must initiate preparations for decelerated growth, and prosperous nations may need to extend financial assistance to lower-income countries to facilitate their efforts in adapting to climate change in the coming decades, as emphasized by the authors of the study.
“We’re at a point where we maybe need to significantly increase financing for [climate] adaptation in developing countries, and we’re also at a point where we might be overestimating our future ability to provide that financing under the current fiscal paradigm,” the researchers explain.
The study employed two economic models to forecast the future growth of the global economy throughout the next century, as well as the rate at which developing nations will approach the income levels of more prosperous counterparts.
Slower expansion
Both models concluded that global economic expansion will persist, albeit at a more moderate pace than initially anticipated. Furthermore, a notable disparity in income levels between wealthier nations and their less affluent counterparts is projected.
Consequently, affluent countries may find it necessary to provide financial support for climate adaptation initiatives in economically disadvantaged nations. Moreover, the frequency of debt-ceiling crises, as exemplified by the recent occurrence in the United States, may increase in the future.
“Slower growth than we think means higher deficits than we expect, all else equal,” the authors explain. “That means debt would likely become more contentious and important over time, and could mean more frequent debt-ceiling fights.”
Restoring stability
According to the researchers, akin to the principle observed during a flight emergency, where individuals are advised to prioritize their own oxygen masks, wealthier nations should concentrate on restoring their financial stability. This would enable them to assume a position of support in assisting lower-income countries in financing climate adaptations.
The projected future entails a state of relatively slower growth alongside increased inequality, yet it is important to note that the global economy will still be richer than the present, and countries will exhibit greater equality compared to the current landscape.
Nevertheless, numerous affluent nations have traditionally relied on economic expansion as a means to alleviate debt burdens. However, such an approach may not be viable within the context of the new scenario.
“The next question is: what are some ways that we should be or could be helping [lower-income countries] adapt, if the expectation is that they’re not going to meet the level of wealth that would allow them to do that quickly and aggressively?” the researchers conclude.
