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The global economy slows down. What are the main factors according to the UN?

2024-01-05 13:04:51Biznes SHKRUAR NGA REDAKSIA VOX

The global economy slows down. What are the main factors according to the UN?

Global economic growth is projected to slow from 2.7 percent in 2023 to 2.4 percent in 2024. This is according to the UN report on the World Economic Situation and Prospects 2024. Weakening global trade, high borrowing costs, rising public debt, persistently low investment and rising geopolitical tensions put global growth at risk, the report says.

Growth in many advanced economies, particularly the United States, is projected to slow in 2024 given high interest rates, slowing consumer spending and weaker labor markets.

Short-term growth prospects for many developing countries, particularly in East Asia, West Asia and Latin America and the Caribbean, are also deteriorating due to tighter financial conditions, shrinking fiscal space and sluggish external demand.

Low-income and vulnerable economies are facing increasing balance of payments pressures and debt sustainability risks. Economic prospects for small island developing states, in particular, will be limited by large debt burdens, high interest rates and growing climate-related vulnerabilities, according to the report.

This latest forecast came after global economic performance beat expectations in 2023. However, last year's stronger-than-expected growth masked short-term risks and structural weaknesses, according to the report. Global inflation is forecast to decline further, from around 5.7% in 2023 to 3.9% in 2024. Price pressures are, however, still high in many countries and any further escalation of geopolitical conflicts risks renewed increases in inflation, the report warns.

In about a quarter of all developing countries, annual inflation is projected to exceed 10% in 2024. Since January 2021, consumer prices in developing economies have risen by a cumulative 21.1%, significantly eroding economic gains achieved after recovery from COVID-19. Amid supply-side disruptions, conflicts and extreme weather events, local food price inflation remained high in many developing economies, disproportionately affecting the poorest households, the report concludes.


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