The United Nations issued a somber global economic forecast for 2024 on Thursday, pointing to challenges from escalating conflicts, sluggish global trade, persistently high interest rates and increasing climate disasters.
In its flagship economic report, the U.N. projected that global economic growth would slow to 2.4 per cent this year from an estimated 2.7 per cent in 2023, which exceeds expectations. But both are still below the 3 per cent growth rate before the COVID-19 pandemic began in 2020, it said.
The U.N. forecast is lower than those of the International Monetary Fund in October and the Organization for Economic Cooperation and Development in late November.
The IMF said it expects global growth to slow from an expected 3% in 2023 to 2.9% in 2024. The Paris-based OECD, comprising 38 mainly developed countries, estimated that international growth would also slow from an expected 2.9% in 2023 to 2.7% in 2024.
The U.N.’s report — World Economic Situation and Prospects 2024 — warned that the prospects of prolonged tighter credit conditions and higher borrowing costs present “strong headwinds” for a world economy saddled with debt, especially in poorer developing countries, and needing investment to resuscitate growth.
Shantanu Mukherjee, director of the U.N.’s Economic Analysis and Policy Division, said fears of a recession in 2023 were averted mainly due to the United States, the world’s largest economy, curbing high inflation without putting the brakes on the economy.
But he told a news conference launching the report: “We’re still not out of the danger zone.”
Mukherjee said that’s because the unsettled situation in the world could fuel inflation. For example, another supply chain shock or problem in fuel availability or distribution could prompt another interest rate hike to bring the situation under control, he said.
“We’re not expecting a recession, per se, but because there is volatility in the environment around us, this is the major source of risk,” he said.
Very high interest rates for a long time and the threat of possible shocks to prices contribute to “quite a difficult balancing act,” Mukherjee said. “So that’s really why we said that we are not yet out of the woods.”
According to the report, global inflation, which was at 8.1% in 2022, is estimated to have declined to 5.7% in 2023, and is projected to decline further to 3.9% in 2023 .
But in about a quarter of all developing countries, annual inflation is projected to exceed 10% this year, it said.
While the U.S. economy performed “remarkably well” in 2023, the report said growth is expected to decline from an estimated 2.5% in 2023 to 1.4% this year.
“Amid falling household savings, high interest rates, and a gradually softening labor market, consumer spending is expected to weaken in 2024 and investment is projected to remain sluggish,” the U.N. said. “While the likelihood of a hard landing has declined considerably, the United States economy will face significant downside risks from deteriorating labor, housing and financial markets.”
With elevated inflation and high interest rates, the report said Europe faces “a challenging economic outlook.”
GDP in the European Union is forecast to expand from 0.5% in 2023 to 1.2% in 2024, it said, with the increase driven by “a pick-up in consumer spending as price pressures ease, real wages rise, and labor markets remain robust.”
Japan, the world’s fourth largest economy, is projected to see economic growth slow from 1.7% in 2023 to 1.2% this year despite the country’s monetary and fiscal policies, the report said, “Rising inflation may signal an end from the deflationary trend that persisted for more than two decades” in the country, it said.
In China, the world’s second-largest economy, the U.N. said recovery from COVID lockdowns has been more gradual than expected “amid domestic and international headwinds.
With economic growth of just 3.0% in 2022, the report said China turned a corner during the second half of 2023 with the growth rate reaching 5.3%. But it said the combination of a weak property sector and faltering external demand for its products “will nudge growth down moderately to 4.7% in 2024.
In developing regions, the U.N. said economic growth in Africa is projected to remain weak with a slight increase from an average of 3.3% in 2023 to 3.5% in 2024.
“The unfolding climate crisis and extreme weather events will undermine agricultural output and tourism, while geopolitical instability will continue to adversely impact several subregions ? especially the Sahel and North Africa,” the report said.
The U.N. forecasts a moderate slowdown in East Asia economies from 4.9% in 2023 to 4.6% in 2024. In Western Asia, GDP is forecast to grow by 2.9% in 2024, up from 1.7% in 2023.
In South Asia, GDP rose by an estimated 5.3% last year 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.” Its growth is forecast to reach 6.2% this year, similar to its projected 6.3% increase in 2023.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
