FeaturedNationalVOLUME 19 ISSUE # 8

Insights from the 2024 World Economic Situation and Prospects report

The 2024 World Economic Situation and Prospects report offers a concerning outlook on the global economy. Despite surpassing expectations in 2023, the world economy faces multiple crises, hindering progress towards the Sustainable Development Goals (SDGs). Geopolitical tensions, extreme weather events, and tight financial conditions pose risks, leading to a forecasted global GDP growth slowdown from 2.7% in 2023 to 2.4% in 2024.

Developing economies struggle to recover from pandemic-induced losses, grappling with high debt and investment shortfalls. The United States anticipates a drop in GDP growth from 2.5% in 2023 to 1.4% in 2024, driven by weakened consumer spending due to high interest rates and a softening labor market. China faces a moderate slowdown, with growth estimated at 4.7% in 2024. Europe and Japan also confront economic challenges, with forecasted growth rates of 1.2% for both regions in 2024. In contrast, Africa’s growth is projected to increase slightly from 3.3% in 2023 to 3.5% in 2024. However, the least developed countries (LDCs) are expected to grow by 5% in 2024, falling short of the 7% SDGs growth target due to high debt and limited fiscal space.

The Commonwealth of Independent States (CIS) outperformed projections, driven by higher-than-expected growth in the Russian Federation, a rebound in Ukraine, and strong performance in the Caucasus and Central Asia. The CIS and Georgia’s aggregate GDP expanded by 3.3% in 2023 and is projected to grow by 2.3% in 2024.

Chinese economic recovery is gradual, moderating from 5.3% in 2023 to 4.7% in 2024. South Asia grew by 5.3% in 2023, projected to increase by 5.2% in 2024, with India leading as the fastest-growing large economy (projected growth of 6.2% in 2024). Growth in Africa is expected to rise from 3.3% in 2023 to 3.5% in 2024, impacted by the climate crisis and geopolitical instability. East Asia anticipates a moderate slowdown, with growth declining from 4.9% in 2023 to 4.6% in 2024.

In contrast, developing countries exhibit mixed progress; while nations like China, Brazil, Turkey, and Russia report declining unemployment, issues such as informal employment, gender gaps, and high youth unemployment persist in Pakistan. Globally, the decline in female labor force participation to 47.2% in 2023 (compared to 48.1% in 2013) and the high NEET rate (not in employment, education, or training) of 23.5% among youth highlight enduring challenges in gender equality and youth employment.


Global inflation, a key concern over the past two years, is showing signs of easing. Global headline inflation fell from 8.1% in 2022 to an estimated 5.7% in 2023 and is projected to decline to 3.9% in 2024. However, food price inflation remains a critical issue in Pakistan, exacerbating food insecurity and poverty. An estimated 238 million people in Pakistan experienced acute food insecurity in 2023, an increase of 21.6 million from the previous year.

The report also highlights challenges in global investment trends affecting Pakistan, with a noted slowdown in investment growth across both developed and developing economies. While developed countries continue to channel investments into sustainable and technology-driven sectors like green energy and digital infrastructure, Pakistan faces challenges such as capital flight and reduced foreign direct investment. Geopolitical tensions further influence these trends in Pakistan, affecting investment flows regionally.

Global investment growth is expected to remain low in Pakistan due to economic uncertainties, high debt burdens, and rising interest rates. Investment in the energy sector, especially in clean energy, is growing in Pakistan but not at a pace sufficient to meet the net-zero-emissions goal by 2050. International trade is losing steam as a growth driver in Pakistan, with global trade growth weakening to 0.6% in 2023 and expected to recover to 2.4% in 2024. The report points to a shift in consumer spending from goods to services in Pakistan, rising geopolitical tensions, supply chain disruptions, and the lingering effects of the pandemic as factors impeding global trade.

Furthermore, the shift towards protectionist policies in some countries has influenced trade dynamics in Pakistan, leading to a reevaluation of global supply chains and trade agreements. The repercussions of these changes are particularly pronounced in Pakistan, which often relies heavily on exports for economic growth. In response, there has been a growing emphasis in Pakistan on diversifying trade partners and strengthening regional trade agreements to mitigate the risks associated with overreliance on a limited number of markets.

Developing countries, including Pakistan, face high levels of external debt and rising interest rates, making access to international capital markets difficult. There is a decline in official development assistance and foreign direct investment for low-income countries like Pakistan. Debt sustainability has emerged as a critical challenge, especially for developing countries like Pakistan, in the wake of rising debt levels and changing global financial conditions. The increase in global interest rates, a consequence of monetary policy tightening by central banks like the Federal Reserve and the European Central Bank, has escalated debt servicing costs in Pakistan, particularly for countries with foreign currency-denominated debts. As a result, Pakistan is grappling with the need for debt restructuring, including renegotiating terms or seeking debt relief, to manage its escalating debt burdens more effectively.

In 2023, extreme weather conditions, including the hottest summer on record since 1880, led to devastating wildfires, floods, and droughts in Pakistan and worldwide. These events have direct economic impacts in Pakistan, such as damage to infrastructure, agriculture, and livelihoods.

Studies have predicted substantial losses to the global economy due to climate change, impacting Pakistan as well. For instance, some estimates suggest a potential reduction of about 10% in global GDP by 2100, considering events like the collapse of the Greenland ice shelf. Other models indicate that without mitigation of global warming, average global incomes could be 23% lower by 2100. The IPCC estimates that global GDP losses could range between 10 and 23 percent by 2100 due to temperature impacts alone.

The 2024 WESP report, with a focus on Pakistan, calls for urgent action to address these diverse challenges. It emphasizes the need for strengthened global cooperation, particularly in areas like climate action, sustainable development financing, and addressing the debt sustainability challenges of low- and middle-income countries such as Pakistan. The report underscores the critical role of multilateralism in navigating the complex global economic landscape and achieving the SDGs in Pakistan.