The United Nations on Thursday reported an improvement in the global economic outlook since its January forecast, and pointed to a better outlook in the United States and several large emerging economies including Brazil, India and Russia.
According to the mid-year 2024 report, the global economy is now expected to grow by 2.7% this year – up from a forecast of 2.4% in the January report – and by 2.8% in 2025.
A growth rate of 2.7% would equal growth in 2023, But it is still below the 3% growth rate before the COVID-19 pandemic began in 2020.
“Our forecasts are cautiously optimistic, but with important caveats,” Shantanu Mukherjee, director of the UN Department of Economic and Policy Analysis, said at a press conference marking the report’s launch.
The report pointed to higher interest rates for longer periods, debt repayment challenges, continuing geopolitical tensions, and climate risks especially for the world's poorest countries and small island states.
Inflation, which has fallen from its peak in 2023, is “a symptom of the underlying fragility” in the global economy where it still lurks, “but it is also a cause for concern in itself,” Mukherjee said.
“We have seen that inflation in some countries remains high... Globally, energy and food prices have risen slowly in recent months, but I think what is more dangerous is the persistence of inflation above the central bank’s target of 2% in many developed countries,” he added.
The UN forecast for 2024 is lower than those of the International Monetary Fund and the Organization for Economic Cooperation and Development.
In mid-April, the International Monetary Fund forecast that the global economy would continue to grow at 3.2% in 2024 and 2025, the same pace as 2023. The OECD in early May forecast growth of 3.1% in 2024 and 3.2 % in 2025.
The latest UN estimates forecast growth of 2.3% for the United States in 2024, up from the 1.4% expected 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 from the UN Department of Economic and Social Affairs expects economic growth to improve from 2.4% in 2023 to 3.3% in 2024 for small island developing states due to a recovery in tourism.
On the negative side, the report expects economic growth in Africa to reach 3.3%, down from a forecast of 3.5% at the beginning of 2024.
The report pointed to weak prospects in the continent's largest economies - Egypt, Nigeria and South Africa - along with seven African countries. Countries in “debt distress” and 13 other countries at “high risk of debt distress.”
Mukherjee said the low forecasts for Africa are “particularly worrying because Africa is home to about 430 million (people) living in extreme poverty and nearly 40% of the world’s population who are undernourished” and “two-thirds of the high-inflation countries on the list.” Our update is also in Africa.
He said that for developing countries, the situation is not “that serious,” but the important source of concern is the continuing decline and sharp decline in investment growth.
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