UN Report: Wage growth failed to offset inflation globally in 2023

The global economy could be headed towards a period of slowdown following weak growth figures and diminished international trade, the United Nations warned in its World Economic Situation and Prospects 2024 report.

According to the UN's annual flagship forecast, economic growth is projected to slow worldwide in 2024 falling below pre-pandemic levels.

Worldwide financial market growth dropped from 3 percent to 2.7 percent last year and is projected to drop further to 2.4 percent by the end of 2024. Developed economies were the most affected by the slowing economic output, with growth figures falling from 2.6 percent in 2022 to 1.6 percent in 2023 and projected to further drop to 1.3 percent in 2024.

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"2024 must be the year when we break out of this quagmire. By unlocking big, bold investments we can drive sustainable development and climate action and put the global economy on a stronger growth path for all," UN chief António Guterres said in regard to the current global financial situation following the report's publication.

Diminished trade, soaring inflation to impact developing countries

Globally inflation fell from 8.1 percent in 2022 to 5.7 percent in 2023 and is expected to decline to 3.9 percent by year's end. However, insecurities, slowing trade and the rising cost of materials threatens to see interest rates rise above 10 percent.

With global trade growth falling to a meagre 0.6 percent from 5.7 percent  in 2022, the cost of daily goods has risen by 21.1 percent in the developing world. Inflation and weak job markets have added to fears of economic hardship.

"In most economies, wage growth failed to offset the impact of inflation and exacerbated the cost-of-living crisis," the report reads, warning that "labour market conditions in many developing countries will likely deteriorate in 2024."

"Persistently high inflation has further set back progress in poverty eradication, with especially severe impacts in the least developed countries," said Li Junhua, Head of the UN's Department of Economic and Social Affairs.

"It is absolutely imperative that we strengthen global cooperation and the multilateral trading system, reform development finance, address debt challenges and scale up climate financing to help vulnerable countries accelerate towards a path of sustainable and inclusive growth."

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