A gloomy U.N. economic forecast points to more sluggish global growth in 2024, but the U.N. chief says wealthy nations could offer a solution.
Global economic growth is projected to slow to 2.4% this year, down from 2.7% in 2023 and 3% before the COVID-19 pandemic began in early 2020, the U.N.'s Department of Economic and Social Affairs, or DESA, reported on Thursday.
That's even lower than the 2.7% and 2.9% projected, respectively, by the Organization for Economic Cooperation and Development and International Monetary Fund.
Sluggish global growth is projected to slow further due to escalating conflicts, extreme weather and weaker global trade and production. Investment is expected to remain weak while debt service obligations reach new heights.
"While rich economies have largely bounced back from the COVID-19 pandemic, developing economies have lost ground," U.N. Secretary-General António Guterres said in the report's foreword.
"Many are drowning in debt, with more than a third at risk of crisis," he said. "As this report makes clear, 2024 is projected to be another tough year."
Several large rich economies are resilient despite monetary tightening and policy uncertainties, the report says, but developing countries face divergent near-term growth prospects with higher borrowing costs adding to debt sustainability risks.
Guterres, however, said rich economies could prevent more erosion in sustainable development and spur climate action by providing at least US$500 billion a year in stimulus financing.
He also urged large multilateral development banks to leverage more private finance at a reasonable cost to developing countries.
A pattern of 'uneven recoveries'
Global inflation is projected to ease to 3.9% this year, down from 5.7% in 2023 and 8.1% in 2022, the report says, due to moderating international commodity prices and weakening of demand amid monetary tightening.
Developed economies had a marked deceleration in inflation, though core inflation rates remained relatively high with rising service sector prices and tight labor markets.
But annual inflation is projected to exceed 10% this year in a quarter of all developing economies.
"Uneven recoveries have set developing countries back much more than developed countries," Shantanu Mukherjee, head of the policy and analysis branch within DESA's sustainable development division, told reporters.
"We are not expecting a recession, per se, but because there is volatility in the environment around us, this is a major source of risk," he said. "Another is that actually sustained high interest rates for a very long period is something the world has not seen for a long time. And this imposes pressures on all parts of the financial system."
