The latest United Nations report on the world economic situation in 2024 reveals a global economy displaying surprising resilience in the face of numerous challenges, yet overshadowed by persistent risks and vulnerabilities.
Despite the turmoil of monetary tightening and policy uncertainties, the world economy in 2023 demonstrated a stronger-than-anticipated resilience, the UN World Economic Situation and Prospects 2024 report noted.
The World Economic Situation and Prospects 2024 is a report produced by the United Nations Department of Economic and Social Affairs (UN DESA), in partnership with the United Nations Conference on Trade and Development (UNCTAD) and the five United Nations regional commissions.
Developed economies, particularly, showcased robust labour markets that bolstered consumer spending, even as central banks implemented sharp interest rate hikes.
Inflation showed signs of easing globally, driven by decreasing energy and food prices, leading to a slowdown in interest rate increases.
However, this apparent resilience masks deeper issues.
Price pressures remain high in many countries, and escalating conflicts in the Middle East threaten to disrupt energy markets and reignite global inflation.
The world is also grappling with the delayed effects of past interest rate hikes, with major central banks indicating a tendency to maintain higher rates for an extended period.
This scenario presents significant challenges for a global economy burdened with high debt levels and in dire need of investment to combat climate change and achieve Sustainable Development Goals (SDGs).
The report projects global GDP growth to decelerate from 2.7% in 2023 to 2.4% in 2024, with a slight improvement expected in 2025.
However, this growth remains below the pre-pandemic trend of 3.0%. While a global recession was avoided in 2023, a prolonged period of low growth is a looming threat, particularly for developing countries, where full recovery from pandemic losses seems increasingly elusive.
The US, despite robust performance in 2023, is expected to see a slowdown in growth in 2024.
Europe, grappling with high inflation and interest rates, anticipates a modest recovery. Japan faces a slowdown amid inflationary pressures, while the Commonwealth of Independent States (CIS) expects moderate growth, impacted by inflation and policy tightening in Russia.
China's recovery from Covid-19 lock-downs has been gradual, with growth expected to dip slightly in 2024. Africa's growth remains weak, hindered by global economic slowdowns and climate crises. East Asia anticipates a moderate slowdown, while South Asia, led by India, expects continued robust growth.
The global labour market has rebounded faster than after the 2008 financial crisis, with unemployment rates in many economies dropping below pre-pandemic levels. However, this recovery is uneven, with developing countries facing higher unemployment and wage growth not keeping pace with inflation, exacerbating living costs.
Global inflation, while easing in 2023, remains above the decade's average before the pandemic.
Food price inflation remains a concern, particularly in Africa, South Asia, and Western Asia, contributing to increased food insecurity and poverty.
Central banks worldwide face the challenge of balancing inflation control, growth stimulation, and financial stability. Developing countries, in particular, must navigate these challenges while managing external debt risks, exacerbated by higher borrowing costs and currency depreciations.
Global investment growth is expected to remain subdued, with a notable slowdown in developed economies and challenges persisting in developing regions. Investment in clean energy has increased, but remains insufficient to meet the 2050 net-zero emissions goal.
Global trade growth has weakened, with a projected modest recovery in 2024. The report highlights the need for reform in the multilateral trading system and increased international cooperation to address financing and debt sustainability challenges and to scale up climate financing.
The UN World Economic Situation and Prospects 2024 calls for an urgent need for strengthened global cooperation to confront the myriad challenges facing the world economy.