Global Economic Monitoring Branch (GEMB)

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.

Climate change has emerged as a source of supply shocks and a key risk to the global economy. While localized supply shocks may have a limited impact, multiple severe events – such as those associated with climate change- can push inflation up.

The majority of central banks kept their policy rates unchanged in the first quarter of 2024, closely watching the decisions of the United States Federal Reserve and the European Central Bank.

Near-term global economic outlook cautiously optimistic as vulnerabilities remain

Given the strong interactions between domestic debt and the broader economy, policymakers must carefully weigh its associated trade-offs while determining the optimal debt structure to minimize chances of domestic debt default.

The world economy continues to face multiple crises, jeopardizing progress towards the Sustainable Development Goals (SDGs). Although global economic growth outperformed expectations in 2023 with several large economies showing remarkable resilience, simmering geo-political tensions and the growing intensity and frequency of extreme weather events have increased underlying risks and vulnerabilities. Furthermore, tight financial conditions also pose increasing risks to global trade and industrial production.

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.