2024-01-05 10:23:28
Yesterday, Thursday, the United Nations issued its economic forecasts for the year 2024. These forecasts were dominated by pessimism driven by the escalation of regional conflicts, the slowdown in international trade, the rise in interest rates, and the effects of climate change.
In the outcome of this main economic report, the United Nations expected economic growth this year to decline to around 2.4%, which is less than the estimated growth for last year, which amounted to regarding 2.7%. The expected growth is also much lower than the growth rates recorded before the outbreak of the Corona epidemic in 2020, which were approximately 3%.
The current United Nations expectations are more pessimistic than those of the International Monetary Fund and the Organization for Economic Cooperation and Development. The International Monetary Fund had expected last October that economic growth this year would approach the level of 2.9%, compared to 3% in 2023. As for the Organization for Economic Cooperation and Development, it estimated that economic growth in 2024 would slow to regarding 2.7%, compared to 2.9% during The year is 2023.
Despite the discrepancy in the estimated and expected growth rates for the years 2023 and 2024, all reports of the United Nations, the Monetary Fund, and the Organization for Economic Cooperation and Development agree that economic growth will slow in 2024, compared to the previous year, 2023.
Yesterday, the United Nations report indicated that tightening credit conditions and raising interest for long periods will represent an adverse factor once morest growth requirements, and will also constitute a pressing factor on the global economy, which is already burdened with debt. This factor will particularly pressure developing and poorer countries, which need investments to revive growth. Despite all these pressures, the report confirmed – at the same time – that the world was able to avoid a severe recession in 2023, due to the United States – the largest global economy – being able to limit inflation without completely curbing the economy.
According to the report, inflation will remain a crisis factor for many countries in the world. During the current year, the inflation rate is expected to exceed 10% in regarding a quarter of developing countries. As for the global inflation rate, which reached 5.7% in 2023, down from 8.1% in 2022, it will decline further to 3.9% during the current year, as a result of interest-raising policies followed in Western countries.
Despite the importance of increasing interest rates to control inflation in this way, the report clearly indicated the repercussions of high interest rates at the global economy level. The report considered that continuing to raise interest rates would represent one of the main challenges facing global economic growth.
Monetary tightening policies, driven by increased interest rates, often lead to deflationary pressures at the economic level, by controlling and reducing the movement of liquidity in the markets. However, central banks adhere to this type of policy, despite these negative effects, in order to be able to curb inflation levels, as is happening specifically now.
In any case, the report clearly pointed out the economic challenges arising from decisions to raise interest rates. The report affirmed that “central banks around the world still face difficult trade-offs in achieving a balance between the goals of inflation, growth, and financial stability,” in a clear reference to the negative repercussions left by tight monetary policies, directed towards controlling inflation.
The report also noted that “central banks in developing countries, in particular, need to deploy a wide range of macroeconomic and macroprudential policy tools to minimize the spillover effects of tightening monetary policy in developed country economies.”
1704451939
#Pessimistic #economic #forecasts #year
