The UN released its latest forecast this week, raising its projection for global growth to 2.3% for the year thanks to brighter prospects in the United States, Europe, and China.
The organization adjusted its January estimate upward by four-tenths, while the 2024 outlook was lowered by two-tenths from earlier expectations, with world growth now seen at 2.5%.
In the report, the United Nations notes that 2023’s revision mainly reflects resilient household spending in the United States, easing consumption and gas prices in the European Union, and strong Chinese growth as pandemic restrictions eased.
On the positive side, the body highlights the strength of labor markets in advanced economies, with high employment rates in the United States and Europe and rising wages in many regions.
It also cautions that this combination complicates inflation control for central banks. The UN stresses the need for broader cooperation to ensure tight monetary policy does not impede growth in developing economies.
Developments and risks in the United States
The UN expects an American economy to expand by 1.1% this year, seven-tenths higher than the January projection, but it also warns of emerging weaknesses in recent months, including a banking sector stress and ongoing inflation challenges.
At the close of 2023 and the start of 2024, the report notes a cooling real estate market and weaker loan demand from predictable adjustments, which should dampen spending and investment.
For 2024, the United States is projected to grow 1%, down seven-tenths from prior estimates.
A Europe more resilient than expected
In Europe, the forecasting economies have shown more durability than previously anticipated, lifting the 2024 growth outlook by 0.7 percentage points to 0.9%.
Despite persistently high energy costs, ongoing inflation, and aggressive monetary tightening weighing on activity, most countries have moved past recession and the near-term outlook has improved, though the report does not provide country-specific details.
For 2024, the UN trims its growth forecast for the European Union by a tenth to 1.5%.
For the United Kingdom, the UN still sees a contraction this year but smaller than expected, around 0.1%, followed by a rebound of about 1.1% next year.
One notable shift since the January update is Russia, which the report had predicting a 2.9% decline but now sees a 0.6% drop.
The Chinese economy, a major engine of global growth, is forecast to grow 5.3% this year and 4.5% next year, supported by a recovery in consumption and investment after the easing of prior pandemic-era measures.
No change in Latin America
In Latin America and the Caribbean, the UN maintains its growth outlook at 1.4% for this year and nudges the 2024 forecast up to 2.4%, reflecting that the slowdown in Argentina, Chile, Brazil, and Colombia has been confirmed yet remains contained.
The organization emphasizes that although 2023 was less stark than initially feared, the world faces a potential long period of slow growth due to lingering pandemic effects, climate pressures, and unresolved macroeconomic challenges.
This is especially troubling for regions like Africa and Latin America, which appear susceptible to prolonged stagnation if investment crucial for future development remains elusive.