Global economic growth gloom due to breakable bottlenecks

The United Nations recently released a report lowering its forecast for world economic growth for this year to 2.4 percent from 2.7 percent in 2023, citing high interest rates, escalating geopolitical conflicts, sluggish international trade as well as tightened credit and rising borrowing costs.

Earlier, international institutions including the International Monetary Fund and the World Bank warned of a global economic slowdown in 2024. The Organisation for Economic Co-operation and Development also predicted at the end of 2023 global economic growth will slow from 2.9 percent in 2023 to 2.7 percent in 2024.

Analysts point out that under the impact of monetary policies in developed economies and continued inflationary pressures, the tightening of the global financial environment, the weakening of trade growth, and the decline of business and consumer confidence have become increasingly obvious. This, coupled with the abuse of trade protectionism by the United States and its stoking of geopolitical conflicts, has caused huge shocks and damage to the world economy.

In order to change the current downbeat expectations for a global recovery, great efforts should be made to remove the obstacles facing economic growth.

First, economic and trade cooperation among countries should be strengthened rather than weakened. In this respect, the experience of cooperation among emerging market and developing economies can be built on. The policy dividends released by the Regional Comprehensive Economic Partnership in 2023, the ever-bigger presence of the Belt and Road Initiative, and strengthened policy coordination and cooperation among emerging markets and developing economies, have helped cope with the spillover effects of the crises in Europe and the US. That the UN report lowers its forecast for the growth of developing economies slightly from 4.1 percent in 2023 to 4.0 percent in 2024, compared with the sharply lower expected growth for developed economies, also shows the greater resilience of developing countries in coping with risks.

Second, the US-led advanced economies should do more to guide market expectations. Since the third quarter of 2023, the US Federal Reserve’s judgment on the trend of inflation has fluctuated back and forth, adding more uncertainties to the market. The developed countries should adopt responsible fiscal and monetary policies, rather than being capricious or reckless as they have been.

Third, green development and digitalization should be accelerated to foster new growth points for a global economic recovery. The wide application of digital technologies such as big data, cloud computing, artificial intelligence and the internet of things, as well as the promotion of green technologies, and the forming of a circular economy, will help promote industrial upgrading and economic growth, create new market demand, improve production efficiency, and promote international trade cooperation.