UN reports improved prospects for world economy, forecasts 2.7 pc growth in 2024

UNITED NATIONS: The United Nations has reported an improved outlook for the global economy since its January forecast, citing a more promising outlook in the United States and several large emerging economies, including Brazil, India, and Russia.

According to its mid-2024 report, the global economy is now projected to grow by 2.7% this year, an increase from the 2.4% forecast in its January report, and by 2.8% in 2025. A growth rate of 2.7% would match the growth in 2023, but would still be lower than the 3% growth rate before the Covid-19 pandemic began in 2020.

"Our prognosis is one of cautious optimism, but with significant caveats," stated Shantanu Mukherjee, director of the UN's Economic Analysis and Policy Division, at a press conference launching the report.

The report highlighted long-term higher interest rates, challenges in debt repayment, ongoing geopolitical tensions, and climate risks, particularly for the world's poorest countries and small island nations.

Mukherjee noted that inflation, which has decreased from its 2023 peak, is both "a symptom of the underlying fragility" of the global economy where it still persists, "but also a cause for concern in its own right."
"We've observed that inflation continues to be high in some countries," he said. "Globally, energy and food prices have been gradually increasing in recent months, but what is perhaps more insidious is the persistence of inflation above the 2% central bank target in many developed countries."

The UN's forecast for 2024 is lower than those of both the International Monetary Fund and the Organisation for Economic Cooperation and Development.

In mid-April, the IMF predicted that the global economy would continue to grow at 3.2% during 2024 and 2025, the same rate as in 2023. Meanwhile, the OECD forecasted 3.1% growth in 2024 and 3.2% in 2025 in early May.

The latest UN estimates predict 2.3% growth in the United States in 2024, up from the 1.4% forecast at the start of the year, and a slight increase for China from 4.7% in January to 4.8% for the year.

Despite climate risks, the report by the UN Department of Economic and Social Affairs forecasts improved economic growth from 2.4% in 2023 to 3.3% in 2024 for small developing island nations, primarily due to a rebound in tourism.

On a less positive note, the report projects that economic growth in Africa will be 3.3%, down from the 3.5% forecast at the beginning of 2024. It cited weak prospects in the continent's largest economies – Egypt, Nigeria, and South Africa – along with seven African countries "in debt distress" and 13 others at "high risk of debt distress."

Mukherjee expressed particular concern about the lower forecast for Africa, noting that "Africa is home to about 430 million people living in extreme poverty and nearly 40% of the global undernourished population," and that "two-thirds of the high inflation countries listed in our update are also in Africa."

For developing countries, he said, the situation isn't 'as dire', but a significant concern is the ongoing decrease and sharp decline in investment growth.

By RSS/AP