By John J. Metzler, January 29, 2024While the world economy performed better than expected during 2023, tough times loom in the upcoming year. That’s according to the UN’s annual report “World Economic Situation and Prospects 2024.”
Wider risks and uncertainties are predicted; “Global GDP growth is projected to slow from an estimated 2.7 percent in 2023 to 2.4 percent in 2024.”
The report cautions, “This veneer of resilience, however, masks both short-term risks and structural vulnerabilities. Underlying price pressures are still elevated in many countries.”
It adds, “A further escalation of conflicts in the Middle East poses the risk of disrupting energy markets and renewing in inflationary pressures worldwide.”
UN Secretary General Antonio Guterres warns, “2024 is projected to be another tough year. Sluggish global growth is projected to slow further. Investment will remain weak. The debt crisis will continue to spiral.”
Though the World Economic Report adds that the United States economy performed “remarkably well in 2023,” going forward, “growth is expected to decelerate from an estimated 2.5 percent in 2023 to 1.4 percent in 2024.”
Robust consumer spending helped the numbers during the past year. Yet it proffers, the “United States economy will face significant downside risks from deteriorating labor, housing and financial markets.”
Such stagnating GDP growth numbers bode ill for the incumbent Biden Administration during an election year in this writer’s assessment.
The European Union countries are due for a mild recovery, “GDP is projected to expand by 1.2 percent in 2024, up from 0.5 percent in 2023.”
Germany however, the most powerful EU economy, faces a slump with a 0.3 percent decline in 2023.
Japan too is projected to see slower growth from 1.7 percent in 2023 to 1.2 percent in 2024.
China’s economy is still facing the commercial aftershocks of the COVID-19 lockdowns; During 2022 Beijing’s GDP rate fell precipitously 3 percent, but growth rebounded to 5.3 percent for 2023. For 2024 China’s growth is expected to slow down to 4.7 percent.
Even the once roaring economies of East Asia will face moderate slowdowns with growth declining from 4.9 percent in 2023 to 4.6 percent in 2024.
“In the Republic of Korea, real GDP growth is estimated to have decelerated from 2.6 per cent in 2022 to 1.4 per cent in 2023, largely due to the slowdown in private consumption, but is expected to accelerate to 2.4 percent in 2024,” the survey adds.
The outlook for Latin America and the Caribbean “remains challenging, with GDP growth expected to slow from 2.2 percent in 2023 to 1.6 percent in 2024.” The Report cautions, “The economic outlook in Latin America and the Caribbean is deteriorating. Growth is slowing.”
The enduring bane of inflation has moderated but is hardly past. “After surging for two years, global inflation eased in 2023 but remained above the 2010-2019 average.” Global headline inflation fell from 8.1 percent in 2022, the highest value in almost three decades, to an estimated 5.7 per cent in 2023. A further decline to 3.9 percent in 2024 is projected.” Nonetheless the Report cautions, “Despite these promising developments, food prices showed signs of an uptick in the second half of 2023.” Moreover, high food prices have been a significant driver of food insecurity in developing countries, disproportionately affecting the poorest households.
The Report advises, “In 2023, global trade growth weakened significantly to an estimated 0.6 percent, a sharp decline from 5.7 per cent in 2022.”
On the positive side the survey states, “Research and Development investment (R&D) remained highly resilient during the pandemic.” Even prior to the COVID-19 pandemic “R&D investments in OECD countries expanded by about 37 percent between 2015 and 2020,” among them Germany, Japan and the Republic of Korea showing the largest increase.
U.S. growth R&D exceeds 3 percent. South Korea’s R&D growth has been dramatic reaching nearly 5 percent in 2020. In China R&D investment as a percentage of GDP increased from 1.7 percent in 2010 to 2.6 percent in 2022.
Inflation surges fuel and food costs in developed countries, remaining an albatross to consumers and the economy, but poses a dire threat in developing lands. Inflation remains a hidden tax which mercilessly erodes purchasing power, slows growth and raises mortgage interest rates.
Inflation has added an additional $5,000 in annual expenses to the average American household. Families acutely feel this burden.
Rampant Inflation has done serious damage to the global economy; above all creating a cycle of despair, frustration and helplessness which then often translates politically into overdue calls for change.
John J. Metzler is a United Nations correspondent covering diplomatic and defense issues. He is the author of Divided Dynamism the Diplomacy of Separated Nations: Germany, Korea, China (2014). [See pre-2011 Archives]
