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Mahesh

13/01/24 07:24 AM IST

UN projects food inflation to go up in 2024 due to El Nino, rising geopolitical tensions

In News
  • Global inflation is estimated to have dropped to 5.7 per cent in 2023 and a continued decrease in inflation to 3.9 per cent has been projected for 2024.
Major findings
  • The report titled World Economic Situation and Prospects report for 2024 forecasts a decline in global inflation in 2024.
  • The report forecasts a deceleration in global gross domestic product (GDP) growth, from an estimated 2.7% in 2023 to 2.4% in 2024.
  • Developing economies, in particular, are struggling to recover from pandemic-induced losses, with many facing high debt and investment shortfalls.
  • It is anticipated that many low-income and vulnerable nations will experience only moderate growth in the upcoming years.
  • South Asia grew by an estimated 5.3% in 2023 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.
  • India is projected to grow by 6.2% in 2024, supported by domestic demand and growth in manufacturing and services.
Inflation
  • 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.
  • Headline inflation measures the total inflation within an economy, which includes commodities like food and energy prices.
  • The decline in inflation was attributed to ongoing moderation in international commodity prices and a decrease in demand due to monetary tightening by the UN.
  • However, food price inflation remains critical, exacerbating food insecurity and poverty, particularly in developing countries.
  • An estimated 238 million people experienced acute food insecurity in 2023, an increase of 21.6 million from 2022.
Climate change
  • 2023 experienced extreme weather conditions, leading to devastating wildfires, floods, and droughts worldwide.
  • These events have direct economic impacts, such as damage to infrastructure, agriculture, and livelihoods.
  • Estimates suggest a potential 10% reduction in global GDP by 2100, considering events like the Greenland ice shelf collapse
  • Without mitigation, models indicate a potential 23% decrease in average global incomes by 2100.
Trade
  • Global trade growth weakened to 0.6% in 2023, anticipated to recover to 2.4% in 2024.
  • The report points to a shift in consumer spending from goods to services, rising geopolitical tensions, supply chain disruptions, and the lingering effects of the pandemic as factors impeding global trade.
  • Rising external debt and increased interest rates hinder developing countries' access to international capital markets
  • Decline in official development assistance and foreign direct investment compounds financial constraints for low-income nations.
Source- DTE

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