In a sobering economic outlook for 2024, the United Nations has highlighted various challenges, including escalating conflicts, sluggish global trade, high-interest rates, and increasing climate disasters. The flagship economic report, titled “World Economic Situation and Prospects 2024,” projects a slowdown in global economic growth to 2.4% this year from an estimated 2.7% in 2023. While this exceeds expectations, it remains below the pre-COVID growth rate of 3% in 2020.
The UN’s projection is more conservative than those of other major institutions. The International Monetary Fund (IMF) expects global growth to slow from 3% in 2023 to 2.9% in 2024, and the Organization for Economic Cooperation and Development (OECD) estimates a decline from 2.9% to 2.7%.
The report emphasizes the strong headwinds facing the world economy, particularly in poorer developing countries burdened with debt. Prolonged tighter credit conditions and higher borrowing costs pose significant challenges and hinder the necessary investment for growth.
Shantanu Mukherjee, director of the U.N.’s Economic Analysis and Policy Division, acknowledged that the U.S. played a crucial role in averting a recession in 2023. However, he expressed concerns about the ongoing volatility, citing potential inflation risks. The report anticipates global inflation to decline from 8.1% in 2022 to 3.9% in 2023. Yet, in approximately a quarter of all developing countries, annual inflation is projected to exceed 10% in 2024.
The U.S. economy, despite performing well in 2023, is expected to face challenges in 2024. The report forecasts a decline in growth from an estimated 2.5% to 1.4%, citing factors like falling household savings, high-interest rates, and a softening labor market.
Europe, grappling with elevated inflation and high-interest rates, is deemed to face a challenging economic outlook. GDP in the European Union is projected to expand from 0.5% in 2023 to 1.2% in 2024, driven by a pick-up in consumer spending as price pressures ease.
Japan, the fourth-largest global economy, is anticipated to experience a slowdown from 1.7% growth in 2023 to 1.2% in 2024. The report suggests that rising inflation may signal an end to the deflationary trend that persisted for over two decades in the country.
China, the second-largest economy, is projected to face a moderate growth decline to 4.7% in 2024 after reaching 5.3% in the latter half of 2023. The report notes challenges from a weak property sector and faltering external demand.
In developing regions, the report anticipates weak economic growth in Africa, influenced by climate crises and geopolitical instability. East Asia economies may experience a moderate slowdown, while Western Asia is forecasted to see improved GDP growth.
Despite the challenges, South Asia, driven by robust expansion in India, remains a growth hotspot. India’s GDP is projected to increase by 6.2% in 2024, reinforcing its position as the fastest-growing large economy globally.
The UN’s economic forecast underlines the complex and interconnected nature of global economic challenges, requiring careful navigation and strategic interventions for sustained growth.