The global economy is expected to stabilise for the first time in three years in 2024 but at a level that is weak by recent historical standards, says the World Bank.
This is contained in a statement issued by the bank’s online media briefing centre on the World Bank’s latest Global Economic Prospects report on Tuesday.
According to the statement, global growth is projected to hold steady at 2.6% in 2024 before edging up to an average of 2.7% in 2025-26.
“That is well below the 3.1% average in the decade before COVID-19.
“The forecast implies that throughout 2024-2026 countries that collectively account for more than 80% of the world’s population will experience slower growth than in the pre-COVID decade.”
The report said overall, developing economies were projected to grow 4% on average over 2024-25, slightly slower than in 2023. It said growth in low-income economies was expected to accelerate to five per cent in 2024 from 3.8% in 2023.
The report, however, said the forecasts for 2024 growth reflected downgrades in three out of every four low-income economies since January. It said in advanced economies, growth was set to remain steady at 1.5% in 2024 before rising to 1.7% in 2025.
According to the report, this year, one in four developing economies is expected to remain poorer than it was on the eve of the pandemic in 2019.
“This proportion is twice as high for countries in fragile- and conflict-affected situations.
“Moreover, the income gap between developing economies 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, an important indicator of living standards, is expected to grow by 3.0% on average through 2026, well below the average of 3.8% in the decade before COVID-19.”
It said global inflation was expected to moderate to 3.5% in 2024 and 2.9% in 2025, but the pace of decline was slower than was projected just six months ago. The report said as a result, many central banks were expected to remain cautious in lowering policy interest rates.
“Global interest rates are likely to remain high by the standards of recent decades averaging about 4% over 2025-2026, roughly double the 2000-2019 average.”
The statement quoted Indermit Gill, World Bank Group’s Chief Economist and Senior Vice- President, as saying:
“Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying.
“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.
“Gill said developing economies would 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.”
The statement quoted Ayhan Kose, World Bank’s Deputy Chief Economist and Director of the Prospects Group, as saying:
“Although food and energy prices have moderated across the world, core inflation remains relatively high, and could stay that way.
“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.”
