The United Nations has issued a sobering warning about the global economy, indicating an extended phase of subdued economic growth that threatens progress toward sustainable development. The annual evaluation of the world’s economic state presents a bleak outlook, highlighting challenges that impede growth, such as increased borrowing costs, geopolitical tensions, and amplified climate-related risks.
Projections from the World Economic Situation and Prospects report depict a deceleration in global growth, estimating a drop to 2.4% this year from 2.7% recorded in 2023. This figure significantly falls below the pre-pandemic trend of 3%, attributing the slowdown to formidable challenges confronting the world.
The current economic landscape is shaped by ongoing actions of major central banks deploying elevated interest rates in response to the highest inflation surge in decades. This inflationary surge is a consequence of the pandemic’s economic fallout and the Ukraine crisis.
Expressing concern that sluggish economic expansion could impede progress towards the UN’s sustainable development goals (SDGs), encompassing poverty eradication and addressing climate change, the report emphasizes the necessity for enhanced international collaboration to stimulate growth and propel the transition to eco-friendly practices.
UN Secretary-General António Guterres underscored the urgency of the situation, advocating for substantial investments to propel sustainable development and climate initiatives. He emphasized the potential of significant investments to steer the global economy towards robust growth beneficial for all.
While current forecasts indicate a projected decline in global inflation from approximately 5.7% in 2023 to 3.9% this year, offering some relief to households and businesses, the report cautions that inflationary pressures persist. Furthermore, it raises concerns about the possibility of geopolitical conflicts exacerbating inflationary challenges, potentially triggering renewed economic pressures.