UN reports brighter global economic outlook, predicts 2.7% growth in 2024

The United Nations reported improved prospects for the world economy since its January forecast on Thursday, pointing to a better outlook in the United States and several large emerging economies including Brazil, India and Russia.

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

"Our prognosis is one of guarded optimism, but with important caveats, Shantanu Mukherjee, director of the UN's Economic Analysis and Policy Division, told a news conference launching the report.

The report pointed to interest rates that are higher for longer periods, debt repayment challenges, continuing geopolitical tensions and climate risks especially for the world's poorest countries and small island nations.

Mukherjee said inflation, which is down from its 2023 peak, is both a symptom of the underlying fragility of the global economy where it still lurks, but also a cause for concern in its own right.

We've seen that in some countries inflation continues to be high, he said. Globally, energy and food prices are inching upward in recent months, but I think a bit more insidious even is the persistence of inflation above the 2 per cent central bank target in many developed countries.

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

In mid-April, the IMF forecast that the world economy would continue growing at 3.2 per cent during 2024 and 2025, the same pace as in 2023. And the OECD in early May forecast 3.1 per cent growth in 2024 and 3.2 per cent in 2025.,

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

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

On a negative note, the report projects that economic growth in Africa will be 3.3 per cent, down from 3.5 per cent 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 said the lower forecast for Africa is particularly worrying because Africa is home to about 430 million (people) living in extreme poverty and close to 40 per cent share of the global undernourished population" and "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 an important concern is the continuing fall and sharp decline in investment growth.