The World Bank’s latest annual forecast rings alarm bells for the global economy, predicting a severe slowdown in 2024, marking the weakest half-decade since the early 1990s.
Global Economic Slowdown in 2024
The report highlights that 2024 will witness the third consecutive year of economic deceleration, pointing towards troubling times ahead.
World Bank’s Annual Forecast About Global Economy
Indermit Gill, the World Bank’s chief economist, articulates concerns about the global economy’s overall performance, even with the apparent control of inflation through higher interest rates.
Impact of Higher Interest Rates
While higher interest rates have successfully managed inflation, the broader economic performance lags behind, according to Gill.
Global Economic Performance Assessment
After a robust rebound in 2021 from the pandemic’s depths, the global economy grew by 3 percent in 2022, dipped to 2.6 percent in 2023, and is projected to post a tepid 2.4 percent in 2024.
Growth Trends: 2021-2024
Comparing growth rates, the figures for 2024 fall behind the 3.1 percent average witnessed in the preceding decade (2010s).
2030 Development Goals Setback
The continuing economic slowdown raises concerns about world leaders falling short of meeting the 2030 development goals set by 193 United Nations members in 2015.
Unfulfilled Promises of the 2020s
Gill labels the 2020s as a period of broken promises, with governments worldwide failing to meet the ambitious targets set for 2020.
Persistent Poverty in Developing Countries
In a quarter of the world’s developing countries, people are now poorer than they were before the pandemic, signaling ongoing challenges.
World Bank’s View on Inflation Control
Despite the bleak outlook, the World Bank notes progress in controlling inflation globally, citing supply chain improvements and higher borrowing costs cooling business activity.
Concerns Over Rising Prices
While inflation is expected to average 3.7 percent globally in 2024, there are concerns that prices may continue rising faster than central banks advise.
Regional Growth Forecast
The World Bank’s forecast indicates the United States growing at a 1.6 percent rate, twice as fast as Europe or Japan. China is expected to grow by 4.5 percent.
Long-term Challenges for Economies
Slowing growth poses challenges for both advanced and middle-income countries, with a significant drop in investment spending in the latter.
Policy Recommendations for Developing Countries
The World Bank suggests policy changes for developing countries, including expanded trade, capital flows, and government budget discipline, to fuel an investment boom.
Historical Examples of Economic Growth
Citing historical examples, the report notes that countries like Chile, Colombia, and Turkey increased annual economic growth rates by almost one-third through higher spending on new infrastructure.
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Cautionary Outlook for 2024
While a good-but-not-great year is expected, the report warns that conditions are more likely to disappoint than produce a positive surprise.
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Global Conflicts and Economic Impact
Global conflicts, such as the war in Gaza and ongoing hostilities in Ukraine, pose threats to global growth, potentially sending oil prices higher and dampening economic activity.
Shipping Disruptions and Economic Ramifications
Recent disruptions in shipping through the Red Sea, particularly the Suez Canal, could put upward pressure on prices if persistent, affecting the United States and other economies.
Conclusion
In conclusion, the World Bank’s report underscores the urgent need for coordinated efforts to address the prolonged economic slowdown and prevent setbacks in achieving global development goals.
