Monthly Briefing on the World Economic Situation and Prospects

The global automotive market is experiencing transformative shifts, with China emerging as a leading force in electric vehicle (EV) production and exports. In contrast, traditional powerhouses like Germany, Japan, the Republic of Korea, and the United States are facing stiff competitiveness challenges.

After seeing near-zero interest rates in major economies in the aftermath of COVID-19, the world economy has experienced rapid monetary tightening since early-2022 (UNDESA, 2024a). Persistent inflationary pressures during the second half of 2021 due to stronger-than-expected recovery in demand, and supply shortages brought along the most aggressive monetary tightening in decades.

On 1 May 2004, eight countries from Eastern Europe – the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia – the group often referred to as EU-8, along with Cyprus and Malta, became full-fledged members of the European Union (EU). This event is often called the “Big Bang” enlargement of the EU, with the set of pre-existing members being referred to as the EU-15.

Industrial and innovation policies are gaining additional traction, becoming crucial aspects of many governments? toolkits to support innovation, build resilience, and accelerate the green energy transition. There are, however, enormous disparities across economies in their capacity to implement industrial policies, particularly those to support science, technology and innovation.

Despite persistent monetary tightening by major central banks, labour market conditions in most developed economies remained robust in 2023. Low unemployment and high economic activity are accompanied with continuing, albeit moderating, labour shortages.

A massive gap in investment and the adoption of low-carbon technologies between the developed and developing countries persist, threatening the urgent need to accelerate the energy transition as well as the achievement of the SDGs.

Higher domestic food prices are a major driver of food insecurity, especially for poor households whose incomes are stagnant or declining. Countries that already faced protracted food crises before the COVID-19 pandemic and the war in Ukraine have been the most affected by the recent food price increases.

Microchips are central to modern industries, ranging from consumer goods, industrial production to national defence. While chip supply shortages, notable during the pandemic, have now largely eased, this has been uneven across user sectors.

Medium-term growth prospects are clouded by scarring from the pandemic, the ever-worsening impact of climate change, and structural macroeconomic challenges, such as anaemic investment and mounting debt vulnerabilities.