World Bank: Global Growth Stabilizes but at “Weak Pace”

According to the Global Economic Prospects, the global economy is expected to stabilize for the first time in 3 years

The global economy is expected to stabilize in 2024, but at a weaker pace compared to recent historical standards. This is stated in the World Bank’s Global Economic Prospects report, explaining that global growth will remain at 2.6% in 2024 and record a small increase to 2.7% in 2025.

This is an estimate revised downward by 0.5% from previous projections of 3.1%, which was the average for the decade prior to the pandemic crisis. According to the study, emerging economies are expected to grow by an average of 4% between 2024 and 2025, slowing slightly from 2023, while growth in low-income countries is expected to accelerate from 3.8% in 2023 to 5% in 2024. Finally, for advanced economies, estimates project growth of 1.5% in 2024 and 1.7% in 2025.

“Four years after the turmoil caused by the pandemic, conflict, inflation, and monetary tightening, global economic growth appears to be stabilizing. However, the growth rate is at a weaker pace than before 2020. The prospect for the world’s poorest economies is even more worrisome. They face very high levels of debt servicing, limited trade opportunities, and high costs,” commented Idermit Gill, Chief Economist and Senior Vice President of the World Bank Group.

The world’s 74 poorest countries participating in International Development Agency (IDA) programs will need international support to stimulate investment, reduce public debt, and improve infrastructure, health, and education.

Global inflation is expected to fall to 3.5% in 2024 and to 2.9% in 2025, but the rate of decline will be slower than expected in the January 2024 forecast: global interest rates are therefore likely to remain high relative to the standards of recent decades, with corresponding implications for growth.

“While food and energy prices have fallen globally, core inflation remains relatively high and may remain so. This could prompt central banks in major advanced economies to postpone interest rate cuts. A ‘higher rates for longer’ environment would mean tighter global financial conditions and much weaker growth in developing countries,” said World Bank deputy chief economist Ayhan Kose.