Shanghai, China.
The global economic outlook has improved since January, but cautious optimism is still needed, according to the UN's Mid-term World Economic Situation and Prospects 2024 released today. The report expects the world economy to grow by 2.7 percent in 2024 and 2.8 percent in 2025, 0.3 and 0.1 percentage points higher than the January projections, respectively. Overall, global growth in the coming years is expected to remain below the average of 3.2 percent for the period 2010-2019.
The report notes that the world's major economies have avoided a severe recession and reduced inflation without increasing unemployment. Inflation has declined in most countries since peaking in 2023. However, rising interest rates, debt sustainability risks, geopolitical tensions and worsening climate risks continue to pose challenges to growth.
Regional economic forecasts
The report notes that despite high interest rates, the U.S. economy has maintained significant growth momentum. The latest forecasts show that the US economy will grow by 2.3% in 2024.
In Europe, economic activity is expected to pick up gradually, driven by falling inflation, strong wage growth, and monetary easing. But geopolitical tensions, weak economic sentiment and the end of fiscal support have weighed on the recovery. In 2024, the EU's economic growth forecast has been slightly lowered to 1.0%.
China's economic forecast has picked up slightly, with growth now forecast at 4.8% in 2024, 0.1 percentage points higher than the January forecast. The report notes that weakness in the property sector remains a major downside risk. But on the other hand, accommodative monetary policy and active fiscal policy are expected to support economic output in the short term. In the long run, stronger policy support is expected to boost investment in the manufacturing sector, especially in emerging sectors.
Japan's GDP growth forecast for 2024 is unchanged from the January forecast at 1.2%, down from 1.9% in 2023. The Bank of Japan ended its negative interest rate regime in March this year, signaling that the Japanese economy has emerged from deflation.
The protracted war in Ukraine continues to affect the economic situation in the Commonwealth of Independent States and Georgia. The region's GDP is expected to grow by 3.3% in 2024, following a 4.0% growth in 2023.
In Russia, the forecast for growth was revised upwards to 2.7% due to strong economic activity in the first quarter and the expected positive fiscal spending effect.
Developing countries continue to face challenges
The report notes that some developing economies are still struggling with stubbornly high inflation, despite weak international commodity prices and tight monetary policies adopted by most central banks putting the global economy on a deflationary path. Many developing economies also face challenges such as rising borrowing costs, persistent exchange rate pressures, and political instability.
The stagnant employment situation in developing economies stands in stark contrast to advanced economies, especially North America, Europe and Japan, where unemployment remains near record lows. In addition, heightened global geopolitical tensions and the potential for multiple conflicts have clouded near-term economic forecasts for some economies.
儿基会/Vlad Sakhin
Small countries like Kiribati are often the hardest hit by climate change.
Small island developing States remain vulnerable
Worsening climate shocks threaten decades of development gains, especially for the world's least developed countries and small island developing States.
Although the economic forecast for small island developing States has been revised upwards to 3.3 percent, this is still below the pre-pandemic average.
The Fourth International Conference on Small Island Developing States will be held in Antigua and Barbuda from 27 to 30 May. Li Junhua, Secretary-General of the Conference and UN Under-Secretary-General for Economic and Social Affairs, said: "Given the unique vulnerabilities of small island developing States, we need to think differently about our support for them. Through more effective partnerships and a more enabling international environment, we can create the space SIDS needs to strengthen their domestic capacities and build resilience for the future. ”
Promote the transition to renewable energy
The report also highlights critical minerals such as lithium, nickel, cobalt and copper, which are critical to the transition to clean energy. However, countries with these resources need smart policies and effective implementation capacity to reap the benefits and break the "resource curse".
International cooperation is essential to facilitate technology transfer and financing to developing countries, combat illicit financial flows, and ensure the supply of critical minerals needed for the green transition. Many of these issues will be addressed by the Critical Energy Transition Minerals Panel recently launched by UN Secretary-General António Guterres. The group will develop a set of common and voluntary principles to build trust and transparency while accelerating the transition to renewable energy.