4 January 2024, 14:13 | Update: 8:26 p. m.
BY ASSOCIATED PRESS
UNITED NATIONS (AP) — The United Nations on Thursday released a grim global economic forecast for 2024, highlighting challenging situations such as escalating conflicts, sluggish global trade, persistently high interest rates and emerging climate disasters.
In its flagship economic report, the U.N. projected that global economic growth would slow to 2.4% this year from an estimated 2.7% in 2023, which exceeds expectations. But both are still below the 3% growth rate before the COVID-19 pandemic began in 2020, it said.
The U.N. forecast is lower than those of the International Monetary Fund in October and the Organization for Economic Cooperation and Development in late November.
The IMF said it expects global expansion to slow from 3% expected in 2023 to 2. 9% in 2024. The Paris-based OECD, made up of 38 basically evolved countries, estimated that foreign expansion would also slow from an expected rate of 2. 9%. in 2023 to 2. 7%. % in 2024.
The UN’s World Economic Situation and Prospects 2024 report warns that prolonged credit crunch situations and higher borrowing prices provide “strong headwinds” for a debt-stricken global economy, with emerging countries most poor, and with lack of investment to resurrect. . growth.
Shantanu Mukherjee, director of the U. N. ‘s Economic Policy and Analysis Division, said fears of a recession in 2023 have been largely averted thanks to the United States, the world’s largest economy, bringing down peak inflation without slowing the economy.
But he said at a press convention before releasing the report, “We’re still out of the danger zone. “
Mukherjee said this because the volatile scenario in the world may simply fuel inflation. For example, some other surprise in the supply chain or a challenge with fuel availability or distribution may simply lead to some other interest rate hike to get the scenario back under control, he said. .
“We don’t expect a recession consistent with the SE, but because there’s volatility in the environment around us, that’s the main source of risk,” he said.
Long-term interest rates and the risk of potential value shocks contribute to “a pretty complicated balancing act,” Mukherjee said. “That’s why we said we’re not out of the woods yet. “
According to the report, global inflation, which was 8. 1% in 2022, is expected to have declined to 5. 7% in 2023 and is expected to decline further to 3. 9% in 2023.
But in about a quarter of all emerging countries, annual inflation is expected to exceed 10% this year, he said.
Although the U. S. economy performed “remarkably well” in 2023, the report says the expansion is expected to slow from an estimated 2. 5% in 2023 to 1. 4% this year.
“Against a backdrop of declining household savings, high interest rates, and a slowing labor market, client spending is expected to weaken in 2024 and investment is expected to remain sluggish,” the UN said. “If it shrinks significantly, the U. S. economy will face significant dangers due to deteriorating labor, housing and capital markets. “
With elevated inflation and high interest rates, the report said Europe faces “a challenging economic outlook.”
European Union GDP is expected to grow from 0. 5% in 2023 to 1. 2% in 2024, it said, driven by “a recovery in customer spending as value pressures ease, real wages and labour markets remain strong. “
Japan, the world’s fourth-largest economy, is expected to see economic expansion slow from 1. 7% in 2023 to 1. 2% this year, despite the country’s financial and fiscal policies, according to the report: “Rising inflation may simply signal the end of “the persistent deflationary end for more than two decades” in the country, Said.
In China, the world’s second-largest economy, the U. N. said recovery from COVID lockdowns has been slower than expected “amid domestic and headwinds. “
With an economic expansion of just 3. 0% in 2022, the report says China turned around in the second half of 2023, with the expansion rate reaching 5. 3%. But he said the combination of a weak real estate sector and faltering external demand for its products “will slow the expansion to 4. 7% in 2024. “
In the coming regions, the UN said economic expansion in Africa is expected to remain weak, with a slight increase from an average of 3. 3% in 2023 to 3. 5% in 2024.
“The current climate crisis and extreme weather events will damage agricultural production and tourism, while geopolitical instability will continue to negatively affect several sub-regions. . . specifically to the Sahel and North Africa,” the report says.
The UN forecasts a slowdown in East Asian economies, from 4. 9% in 2023 to 4. 6% in 2024. In West Asia, GDP is expected to grow to 2. 9% in 2024, up from 1. 7% in 2023.
In South Asia, GDP rose by an estimated 5.3% last year and is projected to increase by 5.2% in 2024, “driven by a robust expansion in India, which remains the fastest growing large economy in the world.” Its growth is forecast to reach 6.2% this year, similar to its projected 6.3% increase in 2023.