(VOVWORLD) - The UN’s World Economic Situation and Prospects 2024 report published on Thursday says that global economic growth has shown positive signs this year, but there are tough challenges for many developing economies. The report is a mid-year update of the economic report published every January.
 (Illustrative photo: XNA/VNA) |
Drivers in the big economies
The world economy is now projected to grow 2.7% in 2024 and 2.8% in 2025, according to the report. Shantanu Mukherjee, Director of the Economic Analysis and Policy Division of the UN Department of Economic and Social Affairs, said that strong performances in some big economies and emerging economies in recent months have created momentum to lift the global economy above the risk of recession.
Major economies continuing with high interest rates to curb inflation without increasing unemployment has stoked confidence in growth.
The latest forecast for the United States points to 2.3% growth in 2024, instead of the 1.4% predicted in January. The outlook for China is now 4.8% growth in 2024, compared with the 4.7% predicted in January.
Upward revisions were also made for other economies, including Brazil, India, and Russia. Although the economic outlook for many developed economies has been revised up, the EU’s growth was revised down from 1.2% to 1%. The UN negatively assessed the growth prospects of many developing economies, especially in Africa, where it believes that 20 countries are bogging in debt, while larger economies like Egypt, Nigeria, and South Africa are recording poor growth rates.
“The outlook for many developing countries is not as rosy. Even there are improvements, prospects for growth in 2024 and 2025 remain much below the pre-pandemic average. For Africa and Least Developed Countries (LDCs), prospects are revised downward to about 3.3% growth in 2024,” Mr. Mukherjee said.
The main factors which negatively impact developing countries are the prolonged downward trend since 2021 of global investment and trade, two areas where developing countries are heavily dependent.
Global investment growth this year is forecast to reach 2.8%, down sharply from 3.7% last year and 5.1% in 2022. Meanwhile, global trade growth is weak. Trade turnover has declined steadily since mid-2022 and continued to drop 5% last year.
A stronger USD has been a burden on import activities, especially in developing countries. South-South trade transactions decreased 7% last year. For many developing countries, who import large raw materials for production, this is a major obstacle to growth.
 Shantanu Mukherjee, Director of the Economic Analysis and Policy Division of the UN Department of Economic and Social Affairs. (Photo: un.org) |
Risks from climate crisis
Although it raised its global growth forecast, the UN also issued many warnings, saying that prolonged high interest rates in the larger economies, bad debt, and escalating geopolitical risks will continue to threaten the economic growth and stability of many countries.
The UN believes the growing impacts of climate change are threatening to erase many years of development achievements in many countries, especially the least developed countries and small island states.
According to Mr. Mukherjee, in the long term the international community needs to promote a just energy transition globally while building mechanisms to help underdeveloped countries with rich resources in energy transition, which are mainly in Africa and South America.
“In our report, we introduce two intertwined issues which we think are important. The first is how to encourage the production and availability of critical minerals, at the scale and speed that is needed for the energy transition. And the second is, how can those countries that are rich in these resources, leverage these to turn into long term SDG gains?,” said Mr. Mukherjee.
Rapid development of technology, particularly artificial intelligence, is another factor mentioned in the UN report that will have a strong impact on the global economy. The report said AI creates numerous opportunities for countries but widens the technology gap between developed economies and the rest of the world.