The global economy is expected to see a growth of 2.7% in 2024, up from the initial projection of 2.4% at the beginning of the year. This growth is expected to continue in 2025, with a slight increase to 2.8%.
This improvement is largely due to better-than-expected performance in major developed and emerging countries, including Brazil, India, Russia, and the United States.
Inflation has also decreased since its peak in 2023, according to Shantanu Mukherjee of the UN Department of Economic and Social Affairs (DESA), who presented the report to journalists in New York.
However, while there are positive developments in the labor market and wage increases in developed countries, there are still concerns about high interest rates, debt sustainability, and geopolitical tensions.
Climate change is also a growing challenge, posing a threat to decades of development progress, particularly for the world’s Least Developed Countries (LDCs) and Small Island Developing States (SIDS).
Although the growth prospects for SIDS have been revised upwards to around 3.3% annually, Mukherjee noted that this is still below pre-pandemic levels, indicating that there is still progress to be made.
For Africa and LDCs in general, growth prospects have been revised downwards to around 3.3% in 2024.
Mukherjee expressed concern about this, as Africa is home to 430 million people living in extreme poverty and has a high number of undernourished individuals. Additionally, a majority of the countries with high inflation rates listed in the report are located in Africa.
He also pointed out that African governments are facing shrinking room for maneuver, as a significant portion of their public revenues are going towards interest payments.
While the debt situation for developing countries is not as dire on average, there are concerns about falling investment growth.
These potential risks, along with inflation, are compounded by the fact that developing countries are heavily reliant on critical minerals such as lithium, nickel, cobalt, and copper for their transition to clean energy.
The report emphasizes the importance of smart policies and effective implementation to ensure that countries with these resources can reap the benefits without falling into the trap of the “resource curse” that has plagued many in the past.