Economies must strive for a prosperous and Qequitable world for all

The World Bank has stated that a one per cent increase in employment leads to a 0.6 per cent increase in GDP growth. This shows that job creation is not only beneficial for individuals but also for the economy as a whole. At least 54 per cent of the surveyed Indians said that the unemployment situation was very serious, while four per cent said that it was not so serious. According to IMF, the GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year). It counts all of the output generated within the borders of a country. GDP is important because it gives an indication of the size of the economy and how it has been performing. The growth rate of real GDP is often used as an indicator of the general health of the economy. In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well. When real GDP is growing strongly, employment is likely to be increasing correspondingly as companies hire more workers for their factories, thanks to which people have more money in their pockets.

When GDP is shrinking, as it did in many countries during the recent global economic crisis, employment will be on the decline. In some cases, GDP may be growing, but not fast enough to create a sufficient number of jobs. Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, which is 3.2 per cent in 2024 and 3.3 per cent in 2025. Asia’s emerging market economies remain the main engine for the global economy. Growth in India and China is revised upwards and accounts for almost half of the global growth. Yet prospects for the next five years remain weak, largely because of the waning momentum in emerging Asia. By 2029, growth in China is projected to moderate to 3.3 per cent, which is well below its current pace. First, we need to address the underlying problem of slow growth. Most of the decline in growth in recent decades has been driven by a slump in productivity.

A big reason for this is that labour and capital are not flowing to the most dynamic sectors. We must also not forget open trade’s role as an engine of growth and jobs. In the last 40 years, real income per capita has doubled globally, while more than a billion emerged from extreme poverty. Over the same period, trade as a share of gross domestic product (GDP) increased by half. It’s true that not everyone benefited from trade, which is why there is a need to do more to ensure that the gains are shared justly. But to close off our economies would be a major blunder. One of the lessons of recent history has been that we must not ignore those left behind by economic and technological progress—be they individuals within a country or entire nations struggling to close the gap. But with the right policies, and by working together, we can build a prosperous and equitable world for all.