The report highlights that over 80 per cent of the world’s population and global GDP will see slower growth compared to the pre-COVID decade.
World Bank’s latest Global Economic Prospects report projects global economic growth to stabilise at 2.6 per cent in 2024, rising slightly to 2.7 per cent in 2025-26.
This is lower than the 3.1 per cent average before COVID-19.
Developing economies will grow by 4 per cent in 2024-25, while low-income economies’ growth will increase to 5 per cent in 2024.
Developing economies are expected to grow by an average of 4 per cent over 2024-25, a slight decline from 2023. Growth in low-income economies is anticipated to accelerate to 5 per cent in 2024, up from 3.8 per cent in 2023. However, forecasts for 2024 growth have been downgraded for three out of every four low-income economies since January. Advanced economies are projected to maintain a steady growth rate of 1.5 per cent in 2024, increasing to 1.7 per cent in 2025.
“Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying,” said Indermit Gill, the World Bank Group’s chief economist and senior vice president. “However, growth is at lower levels than before 2020. Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events. Developing economies will have to find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure. The poorest among them—especially the 75 countries eligible for concessional assistance from the International Development Association—will not be able to do this without international support.”
One in four developing economies is expected to remain poorer than in 2019, with the proportion doubling for countries in fragile and conflict-affected situations. The income gap between developing and advanced economies is set to widen in nearly half of developing economies over 2020-24, the highest share since the 1990s. Per capita income in these economies is projected to grow by 3.0 per cent on average through 2026, below the 3.8 per cent average of the decade before COVID-19.
Global inflation is expected to moderate to 3.5 per cent in 2024 and 2.9 per cent in 2025, though the decline is slower than previously projected. Many central banks are likely to remain cautious in lowering policy interest rates, with global interest rates expected to average about 4 per cent over 2025-26, roughly double the 2000-19 average.
“Although food and energy prices have moderated across the world, core inflation remains relatively high—and could stay that way,” said Ayhan Kose, the World Bank’s deputy chief economist and director of the Prospects Group. “That could prompt central banks in major advanced economies to delay interest-rate cuts. An environment of ‘higher-for-longer’ rates would mean tighter global financial conditions and much weaker growth in developing economies.”
Fibre2Fashion News Desk (KD)
