By Garra - 29/01/2024 in Brazil and World

UN predicts a challenging year for global trade amid slower economic expansion

Global economic growth is expected to slow down this year, to an estimate of 2.4%, in comparison with the 2.7% registered in 2023. The UN’s main economic report presents a challenging outlook for the global economy and trade. The forecast comes after the economic performance exceeded expectations in 2023.

The stronger-than-expected GDP growth last year masked some short-term risks and structural vulnerabilities, the study says. The document cites persistently high interest rates, escalating conflicts, slow international trade, and growing climate disasters as significant challenges to global growth.

The scenario is expected to moderately improve in 2025, with a projected expansion of 2.7%, but will remain below the pre-pandemic trend growth rate of 3%.

Global trade, whose growth weakened significantly in 2023 to about 0.6%, is expected to recover to an increase of 2.4% in 2024 – however, still below the pre-pandemic trend (3.2%).

A report by Unctad (the UN’s trade agency) released in December states that global trade suffered a decline throughout 2023, mainly influenced by the decrease in demand in developed countries, the poor performance of the East Asian economies, and a drop in commodity prices.

In 2024, the agency says, persistent geopolitical tensions, high debt-levels, and widespread economic fragility will exert negative influences on global trade.

Country scenario

The growth of the United States economy, the main driver of the above-expected global expansion last year, is expected to slow down to 1.4% this year – compared to 2.5% in 2023. The UN also predicts a slowdown in China, the world’s second-largest economy, from 5.3% in 2023 to 4.7%.

On the other hand, the UN expects to witness an economic growth recovery in the Eurozone after a greater than expected slowdown in 2023.

Although a recovery of growth in many developing economies in Africa and other parts of the world is expected this year, the report states that the rates will be well below the activity levels that were predicted before the Covid-19 pandemic.

In Latin America, the projection is that Brazil’s GDP growth will slow down from 3.1% in 2023 to 1.6% in 2024, due to the prolonged impacts of higher interest rates and the slowdown in external demand. In Mexico, GDP is projected to grow 2.3% in 2024, following an expansion of 3.5% in 2024.

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