ISLAMABAD: South Asia’s economic outlook is expected to remain strong, outperforming other regions. The GDP is projected to grow by 5.8 per cent in 2024 and 5.7pc in 2025, the United Nations says in its latest report.

The ‘World Economic Situation and Prospects September 2024 Update’, released by the United Nations Department of Economic and Social Affairs (DESA), notes that risks to the region’s prospects are tilted to the downside, however, further escalation of geopolitical conflicts and adverse weather conditions could disrupt supply chains and induce commodity price volatility.

In developed Asia and the Pacific, Japan’s GDP growth projections have been lowered to 0.8pc for 2024 while remaining unchanged at 1.1pc for 2025. While corporate profits and business confidence have improved, private consumption remains weak amid negative real wage growth since 2022. The 2024 growth projections for Australia and the Republic of Korea have been revised up slightly to 1.6pc and 2.6pc, respectively.

The report, released on Tuesday, says after years of turbulence and significant volatility in economic output, the world economy is on a more stable trajectory. Global growth performance has held up surprisingly well in the face of recent shocks, including aggressive interest rate hikes by major central banks during 2022-23 and an escalation of conflicts with international spillovers.

UN says world economy is on a more stable trajectory despite shocks

Robust consumer spending in several large developed and developing economies — buoyed by high levels of employment, rising real wages, and relatively healthy household balance sheets — has sustained economic resilience. In a large number of economies, inflation has slowed considerably and is approaching central bank targets, providing room for monetary easing. In most cases, economies experienced disinflation without a significant deterioration in labour market conditions or contraction in economic activity.

Against this backdrop, global growth is projected to remain steady at 2.7pc in both 2024 and 2025. This represents an upward revision by 0.3 percentage points for 2024 from the forecasts in January, which mainly reflects a better-than-expected economic performance in the United States, but also improved short-term growth prospects in other large economies, notably Brazil, India and the United Kingdom.

Published in Dawn, September 13th, 2024