Global economic growth improves but ‘downside’ lurks

The world economy is forecast to grow 2.7% in 2024, up from 2.4% expected at the start of the year. Growth will reach 2.8% in 2025, a slight increase.

These changes were mainly due to better-than-expected performance in several large developed and emerging countries, especially Brazil, India, Russia and the United States.

Inflation decreased, wages increased

Inflation is also down from its 2023 peak, said Shantanu Mukherjee of the United Nations Department of Economic and Social Affairs (DESA). report for journalists in New York.

He added: “In developed countries, tight labor markets are seeing wages rise for some segments of the population and also attracting people into the workforce, which is very important. important”.

However, the outlook is only cautiously optimistic in the face of higher interest rates for longer, debt sustainability risks and continuing geopolitical tensions.

Islands at risk

Worsening climate shocks are also a challenge, threatening decades of development gains, especially for Least Developed Countries (LDCs) and Small Island Developing States ( SIDS).

Although the outlook for SIDS is being revised upward by about 3.3% per year, Mr. Mukherjee said the figure is still below the pre-pandemic average, meaning “lost ground is yet to be made up.” ”.

In the case of Africa and LDCs in general, the outlook is revised downward to growth of around 3.3% in 2024.

Concern for the continent

“This is particularly worrying because Africa is home to approximately 430 million people living in extreme poverty and accounts for nearly 40% of the globally malnourished population,” he explained. Furthermore, two-thirds of the high-inflation countries listed in the report are on the continent.

“At the same time, it is a cause for concern that the room for maneuver of African governments is also shrinking,” he continued.

“By 2024, on average more than a quarter of public revenue on the continent will be used to pay interest. This is again about 10 percentage points higher than the average in the years immediately before the pandemic.”

For developing countries, in general, the debt situation is not serious, but he is concerned that investment growth will continue to decline.

These “downsides” are compounded by risks such as inflation, which are both a symptom of underlying fragility and a concern.

Breaking the “resource curse”

The report also has a special section on key minerals such as lithium, nickel, cobalt and copper, which are essential for the transition to clean energy.

However, countries possessing these resources will need smart policies as well as effective implementation capacity to reap the benefits.

In the past, mineral-based development was often associated with environmental damage, slowing development of other sectors, poverty, conflict and other adverse outcomes commonly referred to as “profits”. resource curse”.

“It is imperative for developing countries to design and implement clearly targeted and timely economic, social and environmental policies to maximize benefits from mineral resources,” the report said. important and avoid another cycle of the resource curse.”