New Zealand's economic growth, or GDP, is near the bottom of the world rankings - but Aotearoa is still ahead of several major economies, according to the IMF (International Monetary Fund).
Its latest report suggested reasons for why global growth remains sluggish compared to pre-pandemic levels:
- Recovery from the COVID-19 pandemic
- Russia's invasion of Ukraine
- "Increasing geoeconomic fragmentation"
- Central banks raising interest rates (tightening monetary policy)
- Falling global commodity prices
- Sector-wide crises
- Withdrawal of fiscal support amid high debt; and
- Extreme weather events.
In its World Economic Outlook published on Wednesday, the IMF said global growth is forecast to drop from 3 percent this year to 2.9 percent in 2024.
"Advanced" economies will drop from 1.5 percent to 1.4 percent next year, as monetary policy tightening around the world stunts growth, the IMF said. "Emerging" economies are predicted to hold steady next year, unchanged at 4 percent growth.
"Prospects for [developing] countries to catch up to higher living standards are weak," the report noted.
China's unfolding property sector crisis dragged down the overall growth figure and it's so severe the IMF said it could spill over and, "particularly for commodity exporters" like Aotearoa, damage growth.
Despite marginal growth, the IMF said there are fewer risks to the global economy after authorities in the US and Switzerland stemmed "financial turbulence", and the resolution of United States debt-ceiling talks in Congress.
Global growth predictions
New Zealand's economy is at 1.1 percent annual GDP growth, which the IMF predicts will drop marginally to 1 percent next year.
To see how Aotearoa ranks against other countries for economic growth in 2024, Newshub analysed GDP growth percentages across 25 different economies and compared them to 2023's figures (with the change in brackets).
Macao came out on top with a whopping 27.2 percent GDP growth prediction for 2024, while Equatorial Guinea was at the bottom of the list, estimated to shrink by 5.5 percent.
Aotearoa is near the bottom of the annual GDP growth list. However, so are many advanced economies New Zealand compares itself to including Germany, Japan, Finland and Australia.
- 27.2 pc - Macao (down 47.2)
- 7.5 pc - Libya (down 5.0)
- 6.3 pc - India (no change)
- 5.3 pc - Kenya (up 0.3)
- 3.6 pc - Samoa (down 4.4)
- 3.2 pc - Ukraine (up 1.2)
- 3.1 pc - Nigeria (up 0.2)
- 2.7 pc - West Bank And Gaza (down 0.3)
- 2.2 pc - South Korea (up 0.8)
- 1.8 pc - Switzerland (up 0.9)
- 1.6 pc - Chile (up 2.1)
- 1.6 pc - Canada (up 0.3)
- 1.5 pc - Brazil (down 1.6)
- 1.5 pc - United States (down 0.6)
- 1.3 pc - France (up 0.3)
- 1.2 pc - Australia (down 0.6)
- 1.0 pc - Japan (down 1.0)
- 1.0 pc - Finland (up 0.9)
- 1.0 pc - Aotearoa / New Zealand (Down 0.1)
- 0.9 pc - Belgium (down 0.1)
- 0.9 pc - Germany (up 1.4)
- 0.8 pc - Austria (up 0.7)
- 0.7 pc - Italy (no change)
- 0.6 pc - United Kingdom (up 0.1)
- -5.5 pc - Equatorial Guinea (up 0.7)
Inflation
The IMF said global inflation will drop from 6.9 percent in 2023 to 5.8 percent next year - but it also warned "inflation is not expected to return to target until 2025 in most cases".
A steady drop in inflation is put down to tightening monetary policy and lower commodity prices.
Consumer prices in Australia (4 percent) and Singapore (3.5 percent) are predicted to rise faster than in Aotearoa (2.7 percent) by the end of 2024.
According to the estimates, that would put us on par with Japan (2.9 percent) and South Korea (2.3 percent).
Tight labour markets and high inflation expectations could mean pressures on core inflation could stick around.
Unemployment
Aotearoa is set to see a rise in unemployment.
From 3.6 percent currently, the IMF predicts it'll track upwards to 3.8 by the end of the year, and 4.9 percent by the end of 2024.
This would be like Australia's 2024 figure (4.3 percent).
Other advanced economies in New Zealand's region are predicted to have much lower unemployment rates, such as Japan (2.3 percent) or Hong Kong (3.1 percent).
Climate change, geopolitics
The IMF said further extreme weather events, or geopolitical shocks, could cause food and energy prices to spike.
Russia's invasion of Ukraine in early 2022, for example, caused the price of fuel, food, and fertiliser to rise significantly.
A similar disruption to geopolitics in other parts of the world could "constrain the flow of commodities across markets, adding to price volatility", the IMF said.
Countries must also work together to speed up the transition to greener technologies and mitigate climate change's impacts, the agency said.
