UNITED NATIONS: Global economic growth is projected to slow down from an estimated 2.7 percent in 2023 to 2.4 percent in 2024, according to the UN World Economic Situation and Prospects 2024 report, launched on Thursday.
Weakening global trade, high borrowing costs, elevated public debt, persistently low investment, and mounting geopolitical tensions put global growth at risk, says the report.
Growth in many developed economies, especially the United States, is projected to decelerate in 2024 given high interest rates, slowing consumer spending and weaker labor markets.
The short-term growth prospects for many developing countries, particularly in East Asia, Western Asia, and Latin America and the Caribbean, are also deteriorating because of tighter financial conditions, shrinking fiscal space and sluggish external demand.
Low-income and vulnerable economies are facing increasing balance-of-payments pressures and debt sustainability risks. Economic prospects for small-island developing states, in particular, will be constrained by heavy debt burdens, high interest rates and increasing climate-related vulnerabilities, says the report.
“In a nutshell, the world is struggling to get back to the 3.0-percent annual average from 2000 to 2019, representing years of sub-par growth,” said Shantanu Mukherjee, director of the Economic Analysis and Policy Division of the UN Department of Economic and Social Affairs, at the launch of the flagship report.
This latest forecast came on the heels of global economic performance exceeding expectations in 2023. However, last year’s stronger-than-expected growth masked short-term risks and structural vulnerabilities, according to the report.
Growth in the United States is projected to be 1.4 percent in 2024, following an estimated growth rate of 2.5 percent in 2023.
Among major developed economies, the European Union will see a higher growth rate of 1.2 percent in 2024 from an estimated 0.5 percent in 2023. The Japanese economy will continue to slow, from 1.7 percent in 2023 to 1.2 percent in 2024.
For developing economies, growth will slightly drop from 4.1 percent in 2023 to 4.0 percent in 2024.
China’s economy will slow down from the estimated 5.3 percent in 2023 to 4.7 percent in 2024. India’s economy, which was estimated to have expanded 6.3 percent in 2023, will grow 6.2 percent in 2024, according to the report.
Global inflation is projected to decline further, from an estimated 5.7 percent in 2023 to 3.9 percent in 2024. Price pressures are, however, still elevated in many countries and any further escalation of geopolitical conflicts risks renewed increases in inflation, warns the report.
Robust and effective global cooperation initiatives are urgently needed to avoid debt crises and provide adequate financing to developing countries. Low-income countries and middle-income countries with vulnerable fiscal situations need debt relief and debt restructuring to avoid a protracted cycle of weak investment, slow growth and high debt-servicing burdens. In addition, global climate finance must be massively scaled up. Industrial policies should be readjusted to bolster innovation and productive capacity, build resilience and accelerate a green transition.
