The global economy is expected to stabilise in 2024, marking the first time in three years, but at a level that is weak, going by recent historical standards, the World Bank’s latest Global Economic Prospects report, has revealed.
Global growth was projected to hold steady at 2.6 per cent in 2024 before edging up to an average of 2.7 per cent in 2025-26.
That was well below the 3.1 per cent average in the decade before COVID-19.
The forecast implied that over the course of 2024-26, countries that collectively accounted for more than 80 per cent of the world’s population and global gross domestic product (GDP) would still be growing more slowly than they did in the decade before COVID-19.
Overall, developing economies were projected to grow four per cent on average over 2024-25, slightly slower than in 2023.
Growth in low-income economies was expected to accelerate to five per cent in 2024 from 3.8 per cent in 2023.
However, the forecasts for 2024 growth reflected downgrades in three out of every four low-income economies since January.
In advanced economies, growth was set to remain steady at 1.5 per cent in 2024 before rising to 1.7 per cent in 2025.
World Bank Group’s Chief Economist and Senior Vice President, Indermit Gill, stated, “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.
“Developing economies will 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 report said this year, one in four developing economies was expected to remain poorer than it was on the eve of the pandemic in 2019.
This proportion was twice as high for countries in fragile – and conflict-affected situations. Moreover, the income gap between developing economies and advanced economies was set to widen in nearly half of developing economies over 2020-24—the highest share since the 1990s, the report said.
Per capita income in these economies – an important indicator of living standards – was expected to grow by 3.0 per cent on average through 2026, well below the average of 3.8 per cent in the decade before COVID-19.
World Bank said global inflation was expected to moderate to 3.5 per cent in 2024 and 2.9 per cent in 2025, but the pace of decline was slower than was projected just six months ago.
Many central banks, as a result, were expected to remain cautious in lowering policy interest rates.
World Bank said global interest rates were likely to remain high, by the standards of recent decades—averaging about four per cent over 2025-26, roughly double the 2000-19 average.
According to the World Bank’s Deputy Chief Economist and Director of the Prospects Group, “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.”
The latest Global Economic Prospects report also featured two analytical chapters of topical importance.
Ndubuisi Francis
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