12-January-2024-Special-Article

WORLD ECONOMIC SITUATION AND PROSPECTS 2024

The recent release of the United Nations’ World Economic Situation and Prospects (WESP) report for 2024 provides insights into the global economic landscape. Despite projecting a decline in global inflation, the report raises concerns about a simultaneous rise in food inflation, especially in developing nations. This complex scenario, coupled with climate challenges and geopolitical tensions, poses threats to food security, poverty alleviation, and economic growth.

Key Highlights of the World Economic Situation and Prospects Report 2024:

Global GDP Growth:

• Predicts a slowdown in global GDP growth from 2.7% in 2023 to 2.4% in 2024.
• Developing economies, grappling with pandemic-induced losses, face challenges such as high debt and investment shortfalls.
• Persistent issues include high-interest rates, geopolitical conflicts, sluggish international trade, and increased climate-related calamities.

India’s Perspective:

• South Asia grew by 5.3% in 2023, projected to increase by 5.2% in 2024, driven by robust expansion in India.
• India’s growth estimated at 6.2% in 2024, supported by domestic demand, manufacturing, and services.

Inflation:

• Global inflation shows signs of easing, dropping from 8.1% in 2022 to an estimated 5.7% in 2023.
• Food price inflation remains critical, exacerbating food insecurity and poverty in developing countries.
• Climate-related shocks, weak local currencies, and limited pass-through from international prices contribute to rising food inflation.

Climate Change:

• 2023 witnessed extreme weather conditions, impacting infrastructure, agriculture, and livelihoods.
• Climate change projections indicate potential 10% reduction in global GDP by 2100 and 23% decrease in global incomes without mitigation.
• Urgent need for massive scaling up of climate finance and operationalization of the Loss and Damage Fund.

Investment:

• Global investment growth expected to remain low due to uncertainties, high debt, and rising interest rates.
• Developed nations prioritize sustainable sectors, while developing countries face capital flight and reduced foreign direct investment.
• Insufficient investment in clean energy poses challenges to achieving net-zero-emissions goal by 2050.

Labour Market:

• Divergent trends between developed and developing countries post-pandemic.
• Developed countries experience a robust recovery with low unemployment rates, while developing nations face challenges in informal employment, gender gaps, and high youth unemployment.
• Global decline in female labour force participation raises concerns.

Artificial Intelligence (AI) Impact on Global Employment:

• Rapid advancement in AI adoption, impacting global employment.
• AI could reduce demand for low-skilled jobs, posing challenges for women and lower-income countries.

Trade:

• Global trade growth weakened in 2023 but expected to recover in 2024.
• Factors hindering trade include shifting consumer spending patterns, geopolitical tensions, supply chain disruptions, and lingering pandemic effects.

International Finance and Debt:

• Rising external debt and increased interest rates hinder developing countries’ access to international capital markets.
• Debt sustainability emerges as a critical concern, requiring debt restructuring and relief efforts.

Multilateralism and Sustainable Development:

• Emphasis on strengthened global cooperation for climate action, sustainable development financing, and addressing debt sustainability challenges.
• Multilateralism plays a crucial role in navigating the complex global economic landscape and achieving Sustainable Development Goals (SDGs).

Conclusion:

The WESP report for 2024 underscores the intricate challenges facing the global economy. The report emphasizes the imperative need for robust global cooperation, particularly in the realms of climate action and sustainable development financing, to effectively address the multifaceted challenges outlined in the report. Multilateralism stands as a linchpin for achieving the UN-mandated SDGs and steering the global economy towards a more sustainable and resilient future.

Mains Question:

2024. Discuss the key findings and implications of the United Nations’ World Economic Situation and Prospects (WESP) report for 2024. Assess the significance of global cooperation, particularly in climate action and sustainable development financing, in addressing the multifaceted challenges outlined in the report. (150 WORDS).