Global Financial Security at the midpoint of implementing the 2030 Agenda for Sustainable Development, the global community continues to face vulnerability from disruptive shocks, including the intensifying climate crisis and rising conflicts. The urgency of achieving sustainable development highlights the critical need for strengthened international cooperation. The United Nations continues to lead efforts to revitalize effective multilateralism. During the High-level Political Forum on Sustainable Development, convened under the General Assembly in September 2023, a political declaration was adopted to accelerate the realization of the 2030 Agenda. Key actions include advancing the SDG Stimulus introduced by the UN Secretary-General, bridging gaps in science, technology, and innovation, and raising collective ambition for climate action. The Summit of the Future, scheduled for September 2024, will provide a platform for stakeholders to discuss reforms aimed at creating “multilateral solutions for a better tomorrow.”

In the context of this report, key priorities for the international community—aimed at stimulating growth and accelerating SDG progress due to Global Financial Security—include revitalizing the multilateral trading system; reforming development finance and the global financial architecture; addressing debt sustainability challenges in low- and middle-income countries; and significantly increasing climate financing.

The prolonged slowdown in global trade—partly reflecting growing skepticism about globalization in certain countries—underscores the need to reform the multilateral trading system. With unresolved internal governance issues and emerging external challenges, the WTO continues to confront significant obstacles. Maintaining a rules-based, inclusive, and transparent trading framework is essential to boost Global Financial Security trade and support sustainable development, including the energy transition. Urgent reforms are needed to enable the WTO to resolve disputes between member states, accelerate global trade agreements, and address emerging challenges, such as the rising use of trade restrictions.

Read more about The importance of Artificial Intelligence

Read more about Debt crisis and its threat

Tackling international financing and debt sustainability is critical for achieving the SDGs, easing financial pressures, reducing debt distress, and increasing investment flows to developing countries through Global Financial Security. The SDG Stimulus initiative, launched by the UN Secretary-General, outlines urgently needed reforms in the international financial system and calls for an additional $500 billion per year in SDG-related investments. Currently, progress in financing sustainable development is slow and fragmented. With many developing countries facing debt distress, effective international cooperation is urgently needed to restructure debt and address refinancing challenges. The Global Sovereign Debt Roundtable, established in February 2023, aims to facilitate collaboration among stakeholders, improve coordination, promote information sharing, and enhance transparency. Efforts are also underway to strengthen contractual clauses to prevent and better resolve debt crises. More robust multilateral initiatives are required to provide clarity on procedures and timelines, ensure debt standstills during negotiations, and uphold the “comparability of treatment” principle among different creditors.

Scaling up climate finance is essential to achieving SDG 13, which calls on countries to address climate change and its impacts. Estimates suggest that $150 trillion in investment will be needed by 2050 for energy transition technologies and infrastructure, with $5.3 trillion required annually to transform the global energy sector alone. However, climate finance remains well below the level necessary to limit global warming to 1.5°C above pre-industrial levels, as established in the Paris Agreement of 2015. Developed countries’ pledge to provide $100 billion annually in climate finance by 2020 was not fully met, with only $89.6 billion delivered in 2021. The effective operationalization of the Loss and Damage Fund, formally adopted at COP28, and the scaling up of associated financing commitments will be crucial in supporting vulnerable nations to cope with climate-related disasters. Reducing fossil fuel subsidies, strengthening the role of multilateral development banks in climate financing, and promoting technology transfer are essential steps to enhance global climate action for Global Financial Security.

In 2023, the global economy demonstrated greater resilience than anticipated despite substantial monetary tightening and ongoing policy uncertainties worldwide, even as multiple shocks from conflicts and climate-related events disrupted the lives and livelihoods of millions, further threatening progress toward sustainable development. Economic expansion generally exceeded expectations, particularly in several major developed and developing economies. Nevertheless, this apparent strength conceals both short-term vulnerabilities and structural weaknesses.

With high levels of debt, rising borrowing costs, persistently weak investment, sluggish global trade, and growing geopolitical risks of Global Financial Security, the world economy is expected to experience below-potential growth in 2024 and 2025. Although the likelihood of a severe global downturn has diminished, achieving the Sustainable Development Goals (SDGs) during a prolonged period of muted growth will remain a significant challenge.

Global growth is projected to decline from an estimated 2.7 per cent in 2023 to 2.4 per cent in 2024. It is expected to recover modestly to 2.7 per cent in 2025 but will remain below the pre-pandemic trend growth rate of 3.0 per cent. Short-term growth prospects for many developing nations have weakened, with forecasts suggesting that low-income and vulnerable countries are likely to experience only limited growth in the coming years, making a full recovery from pandemic-related losses increasingly difficult.

Several macroeconomic and geopolitical factors are influencing the 2024 growth outlook. Although global inflation is expected to ease further, energy and food prices could rise again due to intensifying conflicts and a heightened risk of climate-related shocks. Inflation had already declined significantly in …

In 2023, inflation eased across nearly all regions, largely due to declines in global energy and food prices. Yet, core inflation—which excludes food and energy—remained well above central bank targets in many developed and developing countries. With continued moderation in commodity prices and weaker overall demand, global inflation is expected to trend downward through 2024. Nonetheless, in nearly one-quarter of developing nations—home to roughly 300 million people living in extreme poverty—annual inflation is projected to surpass 10 per cent, further eroding household purchasing power and hindering efforts to reduce poverty.

Although inflation decelerated significantly in 2023, major central banks have indicated their plans to maintain interest rates at “higher-for-longer” levels, as the dampening effects of the fastest and most synchronized monetary tightening in decades have yet to fully take hold in many countries, including the United States. A prolonged period of elevated borrowing costs and tighter credit conditions poses significant challenges for a global economy burdened with debt and in need of additional investment to revive growth, address climate change, and advance progress toward the SDGs. Persistently high interest rates are likely to dampen overall demand, increase default risks, and could trigger corrections in asset markets—particularly in developed economies—further slowing growth momentum. Tightened global financial conditions may also restrict capital inflows to developing countries or prompt capital outflows, worsening balance-of-payments pressures and debt sustainability concerns.

Finally, global merchandise trade and industrial output remain exceptionally weak due to both cyclical and structural challenges. In the third quarter of 2023, the manufacturing Purchasing Managers’ Index (PMI), a leading gauge of economic activity, showed contraction in all major economies except India.

According to the Finance Agency (2023), elevated housing prices, together with rising asset values, increased homeowners’ net worth and generated a strong wealth effect, which supported high levels of consumer spending (see chapter III). Robust government expenditures further contributed to economic growth in 2023. However, with household savings declining, high interest rates, and a slowly softening labor market, consumer spending is expected to weaken in 2024, while investment is likely to remain subdued. Although a severe economic downturn seems less probable, the risk of a recession persists—particularly if inflation resurfaces, prompting additional monetary tightening, or if prolonged higher interest rates reveal financial vulnerabilities, such as increased credit and default risks for borrowers and higher duration risks for financial institutions, thereby intensifying financial stability concerns.

In China, the post-COVID-19 recovery has been slower than anticipated due to both domestic and international challenges. The economy showed signs of improvement in the second half of 2023, with growth estimated at 5.3 percent for the year, up from 3.0 percent in 2022. However, a combination of corrections in the property sector and weakening external demand—affecting fixed asset investment, industrial output, and exports—is expected to reduce growth slightly to 4.7 percent in 2024. While consumption has been a key growth driver, consumer confidence remains cautious. The government has enacted several policy measures, including lowering policy and mortgage rates and boosting public sector investment funded by new bonds to stimulate the economy.

Europe faces a difficult economic outlook due to persistent inflation, high interest rates, and ongoing geopolitical tensions. GDP in the European Union is projected to grow by 1.2 percent in 2024, up from 0.5 percent in 2023. This modest recovery is expected to be supported by a rebound in consumer spending as price pressures ease, real wages increase, and labor markets stay strong. However, tight financial conditions and the removal of fiscal support will partially offset these growth drivers.

Japan’s economic growth is forecast to slow from 1.7 percent in 2023 to 1.2 percent in 2024, despite accommodative monetary and fiscal policies. Rising inflation may indicate an end to the deflationary period that lasted over two decades. Slower growth in China and the United States, Japan’s main trading partners, is expected to weigh on exports in 2024.

In the Commonwealth of Independent States (CIS), economic performance in 2023 exceeded expectations, reflecting higher-than-anticipated growth in Russia, a moderate rebound in Ukraine following a deep contraction in 2022, and strong results in the Caucasus and Central Asia. Aggregate GDP for the CIS and Georgia is estimated to have grown 3.3 percent in 2023 and is expected to rise moderately by 2.3 percent in 2024. Rising inflation and renewed monetary tightening in Russia are likely to constrain regional growth.

Africa’s growth is projected to remain modest, rising slightly from an estimated 3.3 percent in 2023 to 3.5 percent in 2024, as the region contends with the global economic slowdown and tighter monetary and fiscal conditions. Debt sustainability challenges continue to limit growth prospects, while climate change increasingly affects key sectors like agriculture and tourism. Geopolitical instability will continue to negatively impact certain areas, particularly the Sahel and North Africa.

Growth in East Asia is expected to slow from 4.9 percent in 2023 to 4.6 percent in 2024. Private consumption remains strong in most countries, supported by easing inflation and a steady labor market recovery. While services exports, especially tourism, have rebounded robustly, weaker global demand has constrained merchandise exports, which remain a crucial growth driver for many economies.