United Nations economists are forecasting low growth globally this year, as recovery from the COVID-19 pandemic remains uneven internationally and wild cards such as climate shocks and geopolitical tensions could undermine progress.
The U.N.'s flagship World Economic Situation and Prospects 2024 report launched on Thursday projects global economic growth will slow from 2023's estimated 2.7% to 2.4% this year, below the pre-pandemic growth rate of 3%.
"The better-than-expected performance for 2023 is chiefly driven by several large economies — notably the United States, but also Brazil, India and Mexico," said Shantanu Mukherjee, director of the Economic Analysis and Policy Division at the U.N. Department of Economic and Social Affairs.
But, he said, that growth could slow this year, especially in the United States, because of high interest rates, reduced consumer spending and weaker labor markets.
"We are not out of the danger zone in terms of the general environment being fairly unsettled," Mukherjee told reporters.
Europe also is not without economic challenges as it copes with high inflation and interest rates and the effects of Russia's war in Ukraine. The 27-nation bloc is expected to see 1.2% gross domestic product growth this year.
"That's a very, very modest growth rate for the region, even to catch up some of the lost output," said Hamid Rashid, chief of the Global Economic Monitoring Branch at the U.N. Department of Economic and Social Affairs. "So we are seeing direct impact from the war."
Lingering effects of COVID-19
Developing countries are still struggling to overcome COVID-19 setbacks while coping with high interest rates and rising debt. The economists forecast that in about a quarter of all developing countries, annual inflation is projected to exceed 10% this year.
Worldwide, inflation was forecast to be an average of 3.9% this year, down from 5.7% in 2023.
"That is a rapid change," says Mukherjee. "Back in 2022, we were seeing 8.1%."
In China, the U.N. report found, recovery from the pandemic was slower than expected, but the country turned a corner during the second half of 2023, with the growth rate reaching an estimated 5.3% for the year, up from 3% in 2022.
"We are more optimistic about China's growth outlook in the near-term," Rashid said. "The outlook is stable."
Africa is projected to have modest economic growth, creeping up from an estimated 3.3% in 2023 to 3.5% in 2024. The economists say this will be driven mainly by countries in east and southern Africa.
East Asia is projected to see growth slow from 4.9% in 2023 to 4.6% in 2024, mainly because of a slowdown in global demand for exports.
The outlook in Latin America and the Caribbean is deteriorating.
An important factor contributing to global economic health is trade. While it didn't contract last year, it had very little growth.
"Without global trade picking up, which has been an engine of growth for many developing countries, we will not see the return of growth that we had before the pandemic," Rashid said.
While the economic outlook is not all gloom and doom, the experts say they will be watching several indicators to gauge economic prospects this year. They include challenges arising from monetary tightening, weakened global trade and investment, and rising debt vulnerabilities.
They say these can be compounded by heightened geopolitical risks and rapidly worsening impacts of climate change.
