The Growth World Economy is projected to weaken in 2024, pressured by the delayed effects of climate change and other factors. Rising interest rates will influence consumer spending, business investment, and global trade. In the report titled “The World Economy: Situation and Outlook for 2024,” published this week, the United Nations (UN) forecasts a slower expansion, with global growth pegged at 2.7 percent for 2023 and easing to 2.4 percent in 2024.
The impact of high interest rates on the economy is likely to worsen in 2024
The UN’s latest projection nudges the 2023 forecast up to 2.7 percent, but trims 2024 to 2.4 percent, while anticipating a moderate rebound to 2.7 percent in 2025. The organization notes that growth will remain below the pre-pandemic trend of about 3 percent for a considerable period, in any case. The message is clear: even if crisis conditions are avoided in the near term, a slower pace may persist for years.
According to the UN, the extended period of low growth is linked to several structural risks. Inflationary pressures have re-emerged in many economies, and the aftermath of geopolitical tensions and supply shocks continues to weigh on activity. Persistently high interest rates—maintained by central banks—are highlighted as a major obstacle to global expansion. The organization also emphasizes the need for greater investments to tackle climate change and to advance Sustainable Development Goals (SDGs).
IMF cautions against cutting interest rates too soon
Regional differences will shape how economies perform in the coming year. In the United States, growth is expected to slow from about 2.5 percent in 2023 to roughly 1.4 percent in 2024. In the euro area, growth is projected to pick up gradually, moving from around 0.5 percent in 2023 to about 1.2 percent in 2024. Spain, meanwhile, is forecast to rise from 2.4 percent in 2023 to 1.8 percent in 2024, surpassing the IMF’s latest estimate but trailing the government’s more optimistic forecast.
Global trends
Tight financial conditions and rising geopolitical fragmentation are flagged as risks to both trade and industrial output. The UN notes that while the labor market has recovered rapidly since the pandemic and unemployment sits near historic lows in the United States and several European economies, many developing regions, particularly West Asia and Africa, have not kept pace.
The report also highlights that global inflation is retreating, yet food prices could worsen food insecurity and poverty in parts of the world. Trade is losing speed as a growth engine, even as a surge in services trade—especially tourism and transportation—helps offset some weakness. There is a clear shift toward closer and more resilient supply chains in many countries.
The UN also calls attention to insufficient investment in climate resilience. Projections indicate that by 2050, investment gaps in energy transition technologies and infrastructure could be substantial. Current green finance levels fall well short of what is needed to limit warming to 1.5 degrees Celsius above pre-industrial levels, underscoring the urgency for accelerated action.