New York: Europe and the Arabs
The United Nations' flagship report on the global economic situation and prospects for 2024 has warned that a prolonged period of low growth looms, undermining progress made on sustainable development. According to the United Nations daily news bulletin, a copy of which we received on Friday morning
The report, which was issued yesterday, Thursday, expected global economic growth to slow from about 2.7% in 2023 to 2.4% in 2024, heading below the growth rate before the Covid-19 pandemic of 3.0%.
These latest forecasts come on the heels of global economic performance exceeding expectations in 2023, but stronger-than-expected GDP growth last year masked short-term structural risks and vulnerabilities.
The report explained that the continued rise in interest rates, the further escalation of conflicts, the slowdown in international trade, and the increase in climate disasters pose major challenges to global growth.
The report warned that the possibility of a prolonged period of tightening credit conditions and rising borrowing costs represent strong headwinds facing the debt-laden global economy, in light of the need for more investments to revive growth, combat climate change, and accelerate progress on the path to achieving sustainable development goals.
In a press statement, UN Secretary-General António Guterres said that 2024 must be the year “in which we emerge from this quagmire,” adding that by unleashing large and bold investments, “we can advance sustainable development and climate action, and position the global economy.” On a stronger growth path for all.”
“We must build on the progress made last year towards stimulating the Sustainable Development Goals with at least $500 billion annually in affordable long-term financing for investments in sustainable development and climate action,” Guterres stressed.
Slow growth in developed and developing countries
The report expected that growth in many major advanced economies, especially the United States, would slow in 2024 due to rising interest rates, a slowdown in consumer spending, and weak labor markets.
He also noted that the near-term growth prospects for many developing countries, particularly in East and West Asia, Latin America and the Caribbean, were also deteriorating due to tightening financial conditions, shrinking fiscal space, and slowing external demand.
Low-income and vulnerable economies face increasing balance of payments pressures and debt sustainability risks, according to the report.
He further emphasized that the economic prospects of small island developing States, in particular, are constrained by heavy debt burdens, high interest rates, and increasing climate-related vulnerabilities, which threaten to undermine and, in some cases, reverse gains made on the Sustainable Development Goals.
Inflation and labor markets
The UN report expected global inflation to decline further, from 5.7% in 2023 to 3.9% in 2024. But it indicated that price pressures are still high in many countries, and that any additional escalation of geopolitical conflicts threatens renewed increases in inflation. The report explained that in about a quarter of all developing countries, annual inflation is expected to exceed 10% in 2024.
UN Under-Secretary-General for Economic and Social Affairs Li Junhua said in a press statement that the continued rise in inflation has led to a further decline in the progress made in eradicating poverty, with particularly serious implications for the least developed countries.
He stressed that "it is necessary that we work to strengthen global cooperation and the multilateral trading system, reform development financing, address debt challenges, and increase climate financing to help vulnerable countries accelerate towards a path of sustainable and inclusive growth."
According to the report, global labor markets witnessed an uneven recovery from the Covid-19 pandemic crisis, while labor markets remained resilient despite the slowdown in growth in advanced economies. The report cautioned that in many developing countries, especially in West Asia and Africa, key employment indicators, including unemployment rates, have not yet returned to pre-pandemic levels.
He added that the global gender employment gap remains high, and gender pay gaps not only persist, but have also widened in some occupations.
International cooperation is required
The report called on governments to avoid general financial adjustment operations that may lead to counterproductive results, and to work to expand financial support to stimulate growth at a time when global monetary conditions will remain difficult.
He further noted that central banks around the world continue to face difficult trade-offs in balancing inflation, growth and financial stability objectives, and that central banks in developing countries, in particular, need to deploy a wide range of macroeconomic and macroprudential policy tools to reduce... Minimum indirect effects resulting from tightening monetary policy in the economies of developed countries.
The report stressed that there is an urgent need for strong and effective global cooperation initiatives to avoid debt crises and provide adequate financing to developing countries. He noted that low- and middle-income countries with fragile financial conditions need debt relief and restructuring to avoid a long-term cycle of weak investment, slow growth, and high debt service burdens.
He also stressed the need to increase global climate financing on a large scale, stressing that reducing and then eliminating fossil fuel subsidies, and following up on international financing commitments, including the pledge to provide $100 billion to support developing countries, and encouraging technology transfer, constitute critical importance for enhancing climate action in the country. the whole world.