In a sobering projection, the UN’s World Economic Situation and Prospects report for 2024 anticipates a global growth slowdown from 2.7% in 2023 to 2.4% in 2024. Despite exceeding expectations in the previous year, the strong GDP growth concealed short-term risks and structural vulnerabilities.
CHALLENGES ON THE HORIZON
Persistently high interest rates, escalating conflicts, sluggish international trade, and a surge in climate disasters are identified as significant challenges to global growth. The report paints a somber economic outlook, emphasizing the need for strategic measures to address these issues.
TIGHTER CREDIT CONDITIONS AND HIGHER BORROWING COSTS
The forecast suggests a prolonged period of tighter credit conditions and higher borrowing costs, posing formidable obstacles for a world economy burdened with debt. This comes at a time when increased investments are crucial for reigniting growth, combating climate change, and advancing progress towards the Sustainable Development Goals (SDGs).
A CALL FOR BOLD INVESTMENTS
UN Secretary-General António Guterres urges transformative action in 2024. Unlocking substantial, bold investments is proposed to drive sustainable development, climate action, and place the global economy on a robust growth trajectory. Guterres emphasizes building on the progress made towards an SDG Stimulus of at least $500 billion annually for investments in sustainable development and climate action.
ESCAPE THE QUAGMIRE: GUTERRES
“2024 must be the year when we break out of this quagmire. By unlocking big, bold investments we can drive sustainable development and climate action and put the global economy on a stronger growth path for all,” said UN chief António Guterres.
“We must build on the progress made in the past year towards an SDG Stimulus of at least $500 billion per year in affordable long-term financing for investments in sustainable development and climate action.”
SUBDUED GROWTH ACROSS ECONOMIES
Developed economies, including the United States, face decelerating growth due to high interest rates, weakened labor markets, and slowing consumer spending. Developing countries, especially in East Asia, Western Asia, Latin America, and the Caribbean, see deteriorating short-term growth prospects. Low-income and vulnerable economies grapple with balance-of-payments pressures and debt sustainability risks.
INFLATION TRENDS AND UNEVEN LABOUR MARKET RECOVERY
Global inflation is expected to decline from 5.7% in 2023 to 3.9% in 2024, but challenges persist. In about a quarter of developing countries, annual inflation may surpass 10%. The report highlights the impact of persistently high inflation on poverty eradication, emphasizing the need for global cooperation, reform in development finance, and increased climate financing to support vulnerable countries.
“Persistently high inflation has further set back progress in poverty eradication, with especially severe impacts in the least developed countries,” said Li Junhua, Head of the UN’s Department of Economic and Social Affairs (DESA).
“It is absolutely imperative that we strengthen global cooperation and the multilateral trading system, reform development finance, address debt challenges and scale up climate financing to help vulnerable countries accelerate towards a path of sustainable and inclusive growth.”
LABOUR MARKET DISPARITIES
While developed economies showcase resilient labor markets, many developing countries, particularly in Western Asia and Africa, struggle to return to pre-pandemic employment levels. Gender employment gaps persist, and in some occupations, gender pay gaps have widened, emphasizing the importance of addressing these disparities for inclusive growth.
As the global community faces economic headwinds, the UN report calls for collaborative efforts, bold investments, and transformative actions to navigate challenges and propel the world towards sustainable and inclusive growth.
WHAT ARE THE REASONS FOR SLOW GROWTH?
According to a report by World Economic Forum, the global economic growth rate is expected to slow down from 2.7% in 2023 to 2.6% in 2024 due to high interest rates, increased energy prices, and a slowdown in the world’s top two economies. Geopolitical risk and the wars in Ukraine and the Middle East could also contribute to a worsening global financial outlook.
The OECD expects that the global economy will experience a mild slowdown in 2024, mainly as a result of the necessary monetary policy tightening over the past two years. Inflation has declined from last year’s peaks, but remains elevated in many countries.
