World Bank warns that global growth is set to slow for the third consecutive year in 2024, further exacerbating poverty and debt levels in developing countries. The COVID-19 pandemic, followed by the war in Ukraine and rising inflation and interest rates worldwide, have contributed to what is projected to be the worst performance in three decades. The World Bank’s latest Global Economic Prospects report forecasts global GDP growth of 2.4% this year, lower than the previous year, 2023, and significantly weaker than the rebound seen in 2021.
World Bank Deputy Chief Economist Ayhan Kose highlights that the projected growth during the 2020-2024 period will be weaker than during previous global crises, including the 2008-2009 financial crisis and the late 1990s Asian financial crisis. Excluding the contraction caused by the pandemic in 2020, this year’s growth is expected to be the weakest since the 2009 financial crisis. The report also forecasts slightly higher global growth of 2.7% in 2025, but this is a downgrade from the June forecast due to anticipated slowdowns among advanced economies.
The World Bank’s ambitious goal of ending extreme poverty by 2030 now appears unlikely to be achieved, with geopolitical conflicts hindering economic activity. World Bank Group Chief Economist Indermit Gill warns that without significant corrective measures, the 2020s will be remembered as a decade of missed opportunities. Developing countries, especially the poorest ones, are at risk of being trapped in a cycle of high levels of debt and limited access to food, with nearly one in three people affected.
The United States is expected to exhibit strong spending this year, contributing to an estimated higher growth rate of 2.5% in 2023 compared to previous forecasts. However, the outlook for the eurozone is bleak, with energy price increases resulting in minimal growth of 0.4% in 2023 and a forecast of 0.7% growth this year. China’s growth is also a concern, with a forecasted expansion of 4.5% in 2024, its slowest pace in over three decades.
The World Bank suggests that accelerating investment in clean energy and climate change adaptation could boost growth, particularly in emerging market and developing countries. The bank’s analysis indicates that significant investment accelerations can stimulate per-capita income growth, output in manufacturing and services, and improve fiscal positions. However, achieving such accelerations requires comprehensive reforms, including structural changes to facilitate cross-border trade and financial flows, as well as improvements in fiscal and monetary policies.
In conclusion, the World Bank’s warning about slowing global growth in 2024 emphasizes the challenges faced by developing countries, with prolonged poverty and high levels of debt. The bank’s projection of weaker growth compared to previous crises calls for immediate action to address geopolitical conflicts and implement measures to boost economic development. Accelerating investment in clean energy and climate change adaptation could help stimulate growth, particularly in emerging market and developing economies. However, achieving these accelerations will require comprehensive reforms and policy improvements on a global scale.
