On Tuesday, the World Bank issued a cautionary statement indicating that the global economic growth in 2024 is expected to decelerate for the third consecutive year. This ongoing slowdown is anticipated to extend the challenges of poverty and escalating debt burdens in numerous developing nations.
Constrained by the impact of the COVID-19 pandemic, followed by the conflict in Ukraine and subsequent surges in global inflation and interest rates, the initial half of the 2020s is currently poised to be the most challenging five-year period in three decades, according to the statement. According to the most recent Global Economic Prospects report by the World Bank, the projected global GDP growth for this year is 2.4%. This is a decrease compared to 2.6% in 2023, 3.0% in 2022, and 6.2% in 2021, which witnessed a rebound as the pandemic concluded.
World Bank Deputy Chief Economist Ayhan Kose informed reporters that this anticipated growth would result in a weaker performance during the 2020-2024 period compared to the years surrounding the global financial crisis of 2008-2009, the Asian financial crisis of the late 1990s, and the downturns in the early 2000s. Excluding the contraction experienced in 2020 due to the pandemic, the growth expected this year is projected to be the most sluggish since the global financial crisis of 2009, according to the development lender.
The forecast for global growth in 2025 is slightly higher at 2.7%, but this has been revised down from the June estimate of 3.0% due to anticipated slowdowns in advanced economies. The World Bank’s ambition to eradicate extreme poverty by 2030 now appears significantly challenging, given the hindrance to economic activity caused by geopolitical conflicts. In a statement, World Bank Group Chief Economist Indermit Gill remarked that, without a significant change in direction, the 2020s could be remembered as a decade of missed opportunities.
“In the short term, growth will continue to be feeble, trapping numerous developing nations, particularly the most impoverished ones, in a predicament characterized by overwhelming levels of debt and precarious access to food, affecting nearly one in three individuals,” Gill emphasized. The subdued forecast for this year follows an unexpected improvement in the 2023 global growth, which surpassed the June projections by approximately 0.5 percentage points. This deviation was attributed to the outperformance of the U.S. economy, driven by robust consumer spending.
In 2023, the U.S. economy expanded by 2.5%, surpassing the June estimate by 1.4 percentage points, as indicated by the World Bank. However, the forecast for this year anticipates a slowdown to 1.6% due to restrictive monetary policies curbing activity amid reduced savings, though this projection is twice the June estimate. The economic outlook for the eurozone is notably grim, with a projected growth of 0.7% this year, influenced by elevated energy prices that led to a mere 0.4% growth in 2023. The region’s 2024 prospects have been revised down by 0.6 percentage points from the June forecast due to more stringent credit conditions.
