UN forecasts improved prospects for the world economy

The United Nations on Thursday reported improved prospects for the world economy since its last forecast in January.

It’s mid-2024 report points to a better outlook in the United States and several large emerging economies, including Brazil, India, and Russia.

According to the report, the world economy is now projected to grow by 2.7 per cent this year, up from the 2.4 per cent it forecast in its January report – and by 2.8 per cent in 2025.

"Our prognosis is one of guarded optimism, but with important caveats,” said Shantanu Mukherjee, the director of the UN’s Economic Analysis and Policy Division, at a news conference launching the report.

It pointed to interest rates that are higher for longer periods, debt repayment challenges, continuing geopolitical tensions, and climate risks, especially for the world’s poorest countries and small island nations.

Mukherjee said while inflation was down from its 2023 peak, it remained “a symptom of the underlying fragility” of the global economy.

“Globally, energy and food prices are inching upward in recent months, but I think a bit more insidious even is the persistence of inflation above the 2 per cent central bank target in many developed countries,” he said.

On a negative note, the UN report projects that economic growth in Africa will be 3.3 per cent, down from 3.5 per cent forecast at the beginning of 2024.

It cited weak prospects in the continent’s largest economies – Egypt, Nigeria and South Africa – along with 7 African countries “in debt distress” and 13 others at "high risk of debt distress”.

Mukherjee said the lower forecast for Africa “is particularly worrying because Africa is home to about 430 million (people) living in extreme poverty and close to 40 per cent share of the global undernourished population".

He added that "two-thirds of the high inflation countries listed in our update are also in Africa”.