UNITED NATIONS, Jan. 4 (Xinhua) -- Global economic growth is projected to slow down from an estimated 2.7 percent in 2023 to 2.4 percent in 2024, according to the UN World Economic Situation and Prospects 2024 report, launched on Thursday.
Weakening global trade, high borrowing costs, elevated public debt, persistently low investment, and mounting geopolitical tensions put global growth at risk, says the report.
Growth in many developed economies, especially the United States, is projected to decelerate in 2024 given high interest rates, slowing consumer spending and weaker labor markets.
The short-term growth prospects for many developing countries, particularly in East Asia, Western Asia, and Latin America and the Caribbean, are also deteriorating because of 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 constrained by heavy debt burdens, high interest rates and increasing climate-related vulnerabilities, says the report.
"In a nutshell, the world is struggling to get back to the 3.0-percent annual average from 2000 to 2019, representing years of sub-par growth," said Shantanu Mukherjee, director of the Economic Analysis and Policy Division of the UN Department of Economic and Social Affairs, at the launch of the flagship report.
This latest forecast came on the heels of global economic performance exceeding expectations in 2023. However, last year's stronger-than-expected growth masked short-term risks and structural vulnerabilities, according to the report.
Growth in the United States is projected to be 1.4 percent in 2024, following an estimated growth rate of 2.5 percent in 2023.
Robust consumer spending on the back of strong household balance sheets and resilient labor and housing markets supported the better-than-expected performance in 2023. Despite aggressive monetary tightening, the unemployment rate remained low. Robust house prices boosted and sustained the net worth of homeowners, exerting a strong wealth effect and supporting high levels of household spending. This may change quickly, especially if housing and asset prices drop and effectively reduce household net worth, says the report.
Amid falling household savings, high interest rates, and a gradually softening labor market, consumer spending is expected to weaken in 2024 and investment is projected to remain sluggish in the United States. While the likelihood of a hard landing has declined considerably, the U.S. economy will face significant downside risks from deteriorating labor, housing and financial markets, it says.
Among major developed economies, the European Union will see a higher growth rate of 1.2 percent in 2024 from an estimated 0.5 percent in 2023. The Japanese economy will continue to slow, from 1.7 percent in 2023 to 1.2 percent in 2024.
For developing economies, growth will slightly drop from 4.1 percent in 2023 to 4.0 percent in 2024.
China's economy will slow down from the estimated 5.3 percent in 2023 to 4.7 percent in 2024. India's economy, which was estimated to have expanded 6.3 percent in 2023, will grow 6.2 percent in 2024, according to the report. ■
