Extended period of low economic growth looms large, undermining progress on sustainable development

The world economy in 2023 proved to be resilient, exceeding expectations with an estimated growth rate of 2.7 per cent, higher than the 2.3 per cent forecast last May. However, this better-than-expected performance masks underlying short-term risks and structural vulnerabilities.

The World Economic Situation and Prospects 2024, launched today in New York, presents a sombre economic outlook for the near term, with global growth in 2024 projected to slow to 2.4 per cent. Persistently high interest rates, potential escalation of conflicts, sluggish international trade, and increasing climate disasters, pose significant challenges to the world economy.

“Prospects are weakening as years of easy liquidity have turned around, with sharp hikes in interest rates, now expected to stay higher for longer,” said Shantanu Mukherjee, Director of the Economic Analysis and Policy Division of UN DESA. “That’s contributing to slowing investments, increasing debt distress, and worsening fiscal conditions.”

These trends do not bode well for developing countries, especially least developed countries and small island developing States, who are weighed down by heavy debt burdens, rising interest costs, weakening investments, and increasing climate-related vulnerabilities.

While inflation pressures are projected to ease further, decreasing from an estimated average of 5.7 per cent in 2023 to an average of 3.9 per cent in 2024, they are still elevated in many countries. In about a quarter of all developing countries, annual inflation is forecast to exceed 10 per cent in 2024.  “That will be eating away what people’s earnings can buy and inflicting further pain, especially on the middle-class, and those living in poverty,” added Mr. Mukherjee.

The report presents the economic outlook for developed economies, the economies in transition, and developing economies in Africa, East Asia, Western Asia, South Asia and Latin America and the Caribbean.  A special chapter on the risks and challenges of global monetary tightening describes the unconventional monetary policies adopted by major central banks and analyses their lingering effects on developing countries.

The World Economic Situation and Prospects 2024 also outlines critical priorities for the international community not only to stimulate economic growth, but also to accelerate progress on the Sustainable Development Goals. These include strengthening the multilateral trading system, reforming the global financial architecture, and scaling-up climate financing.

Access the new report here: desapublications.un.org