| News Source: DTE A recent United Nations report titled World Economic Situation and Prospects report for 2024 forecasts a decline in global inflation in 2024, but warns of a simultaneous rise in food inflation, particularly in developing nations, due to El Nino, rising geopolitical tensions. The implications of this phenomenon, coupled with climate-related challenges and geopolitical tensions, pose threats to food security, poverty alleviation, and economic growth. |
What are the Key Highlights of the World Economic Situation and Prospects Report for 2024?
| Global GDP Growth | The report forecasts a deceleration in global gross domestic product (GDP) growth, from an estimated 2.7% in 2023 to 2.4% in 2024. Developing economies, in particular, are struggling to recover from pandemic-induced losses, with many facing high debt and investment shortfalls. It is anticipated that many low-income and vulnerable nations will experience only moderate growth in the upcoming years.The reasons are persistently high-interest rates, escalating geopolitical conflicts, slow international trade and an increase in climate-related calamities. |
| India’s Perspective | South Asia grew by an estimated 5.3% in 2023 and is projected to increase by 5.2% in 2024, driven by a robust expansion in India, which remains the fastest-growing large economy in the world. India is projected to grow by 6.2% in 2024, supported by domestic demand and growth in manufacturing and services. |
| Inflation | Global inflation, a key concern over the past two years, shows signs of easing. Global headline inflation fell from 8.1% in 2022 to an estimated 5.7% in 2023 and is projected to decline to 3.9% in 2024.Headline inflation measures the total inflation within an economy, which includes commodities like food and energy prices. The decline in inflation was attributed to ongoing moderation in international commodity prices and a decrease in demand due to monetary tightening by the UN. However, food price inflation remains critical, exacerbating food insecurity and poverty, particularly in developing countries. An estimated 238 million people experienced acute food insecurity in 2023, an increase of 21.6 million from 2022.Weak local currencies, climate-related shocks and limited pass-through from international prices to local prices will be the causes of this ongoing increase in food inflation. The resurgence of El Nino can disrupt climate patterns, leading to both excessive and insufficient precipitation affecting food production. |
| Labour Market: | The global labour market displays divergent trends between developed and developing countries post-pandemic. Developed Countries: a) Experienced a robust recovery with low unemployment rates, notably 3.7% in the US and 6.0% in the EU in 2023, coupled with rising nominal wages and narrowing wage inequality. However, real income losses and labour shortages pose challenges. Developing Countries: a) Mixed progress with varied unemployment trends (e.g., China, Brazil, Türkiye, Russia report declines). b) Persistent issues are informal employment, gender gaps, and high youth unemployment. c) Globally, the decline in female labor force participation to 47.2% in 2023 (compared to 48.1% in 2013). Artificial Intelligence(AI) Impact on Global Employment: Since ChatGPT’s introduction in 2022, AI adoption has rapidly advanced. One-third of global firms now use generative AI, with 40% planning to expand AI investment. AI could reduce demand for low-skilled jobs, disproportionately impacting women and lower-income countries. Also, there’s a significant gender gap in AI professions. |
| International Finance and Debt: | Rising external debt and increased interest rates hinder developing countries’ access to international capital markets. Decline in official development assistance and foreign direct investment compounds financial constraints for low-income nations. Debt sustainability becomes a critical concern, necessitating debt restructuring and relief efforts to manage escalating financial burdens effectively. |
| Trade: | Global trade growth weakened to 0.6% in 2023, anticipated to recover to 2.4% in 2024. The report points to a shift in consumer spending from goods to services, rising geopolitical tensions, supply chain disruptions, and the lingering effects of the pandemic as factors impeding global trade. |
| Multilateralism and Sustainable Development: | The 2024 WESP report emphasizes the need for strengthened global cooperation, particularly in areas like climate action, sustainable development financing, and addressing the debt sustainability challenges of low- and middle-income countries. The report underscores the critical role of multilateralism in navigating the complex global economic landscape and achieving the UN-mandated Sustainable Development Goals (SDG). |
| Climate Change | 2023 experienced extreme weather conditions, leading to devastating wildfires, floods, and droughts worldwide.These events have direct economic impacts, such as damage to infrastructure, agriculture, and livelihoods. Studies project significant economic losses due to climate change.Estimates suggest a potential 10% reduction in global GDP by 2100, considering events like the Greenland ice shelf collapse. Without mitigation, models indicate a potential 23% decrease in average global incomes by 2100. IPCC estimates predict a range of 10 to 23% global GDP losses by 2100 due to temperature impacts alone. |
| Initiative By India To Tackle Climate Change On Food: National Mission for Sustainable Agriculture National Millets Mission (NMM) Net Zero Carbon Emission in Indian Railways by 2030 National Action Plan on Climate Change Soil Health Mission Biotech-KISAN Climate Smart Village |
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