World Bank Anticipates Global Growth to Decelerate for the Third Consecutive Year in 2024
The World Bank has issued a warning stating that global growth in 2024 is expected to slow for the third consecutive year. This prolonged slowdown is anticipated to exacerbate poverty and worsen debt levels in many developing countries.
The challenging factors include the ongoing impact of the COVID-19 pandemic, the conflict in Ukraine, and the resulting spikes in inflation and interest rates globally. The first half of the 2020s is predicted to be the worst half-decade performance in 30 years.
According to the World Bank’s Global Economic Prospects report, global GDP is projected to grow by 2.4 percent in 2024. This is a decline from 2.6 percent in 2023, 3 percent in 2022, and 6.2 percent in 2021, which marked a rebound as the pandemic began to subside.
The anticipated growth in the 2020-2024 period is expected to be weaker than during the years surrounding the 2008-2009 global financial crisis, the late 1990s Asian financial crisis, and downturns in the early 2000s, as highlighted by World Bank Deputy Chief Economist Ayhan Kose.
Excluding the contraction experienced during the pandemic in 2020, the World Bank indicates that growth in the current year is poised to be the weakest since the global financial crisis of 2009.
The development lender forecasts global growth to be slightly higher at 2.7 percent in 2025, but this projection has been revised down from the June forecast of 3 percent. The adjustment is attributed to anticipated slowdowns in advanced economies.
The World Bank’s ambition of eradicating extreme poverty by 2030 appears increasingly challenging, with economic activity constrained by ongoing geopolitical conflicts. The cumulative impact of factors such as the COVID-19 pandemic, the war in Ukraine, and global economic uncertainties has led to a subdued growth outlook, making the goal of ending extreme poverty by 2030 more difficult to attain.
“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” World Bank Group Chief Economist Indermit Gill said in a statement.
“Near-term growth will remain weak, leaving many developing countries especially the poorest stuck in a trap, with paralyzing levels of debt and tenuous access to food for nearly one out of every three people,” Gill added.
The global economic outlook for 2024 remains lackluster, following higher-than-expected growth in 2023, particularly in the United States. The US economy outperformed predictions with a growth rate of 2.5 percent in 2023, 1.4 percentage points higher than the June estimate.
The World Bank forecasts a slowdown in US growth to 1.6 percent in 2024 due to restrictive monetary policies impacting activity amid reduced savings.
In contrast, the eurozone faces a bleaker picture, with growth forecasted at 0.7 percent in 2024 after experiencing just 0.4 percent growth in 2023, influenced by high energy prices. Tighter credit conditions led to a 0.6 percentage point reduction in the region’s 2024 outlook compared to the June forecast.
China’s slowing growth also contributes to global economic concerns, with a forecasted expansion of 4.5 percent in 2024, marking its slowest growth outside the pandemic-affected years of 2020 and 2022. This forecast was reduced by 0.1 percentage point from June, reflecting weaker consumer spending amid ongoing turmoil in the property sector. China’s growth is expected to further slow to 4.3 percent in 2025.
The World Bank highlights the challenges faced by emerging markets and developing economies, with a forecasted growth rate of 3.9 percent in 2024, down from 4 percent in 2023.
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This pace is insufficient to lift growing populations out of poverty, and by the end of 2024, people in about one out of every four developing countries and 40 percent of low-income countries are expected to be poorer than they were in 2019.
To boost growth, especially in emerging markets, the World Bank suggests accelerating the $2.4 trillion in annual investment needed to transition to clean energy and adapt to climate change. The bank emphasizes that achieving such accelerations requires comprehensive reforms, including structural changes to expand cross-border trade and financial flows, as well as improvements in fiscal and monetary policy frameworks.
