Global Economy Expected To Slow For Third Consecutive Year In 2024
The Global Economy is expected to slow for a third consecutive year in 2024, the World Bank has predicted.
High interest rates, lingering inflation, less trade, and a slower China all contribute to this prediction which foresees the world economy expanding just 2.4% this year – down from 2.6% in 2023, 3% in 2022, and a distant 6.2% in 2021.
“Nearly all the economic forces that powered progress and prosperity over the last three decades are fading,” the Western institution said, summarising a recent report that also laid out policy options to boost worldwide economies.
An increase in global tensions, mainly triggered by the wars in Ukraine and Gaza, threatens global economic growth which will harshly impact poor nations.
In fact, World Bank officials showed concern that deeply indebted developing countries can’t afford to make necessary investments to fight both poverty and climate change.
Issues like poverty, climate change, and diverging incomes would be harder to tackle for the world as a whole due to this expansion slowdown, officials said.
Nonetheless, the World Bank found that the global economy grew half a percentage point faster in 2023 than it had predicted and subsequently concluded that the risk of a global recession has “receded”.
Further showing resilience in the international economy which was challenged by Russia’s invasion of Ukraine, inflation, and higher interest rates imposed by central banks to weaken borrowing and spending in an effort to control price increases.
The World Bank predicts that the 20 nations using the euro will achieve a slight growth of 0.7% this year, slightly better than the 0.4% growth seen last year.
The United States, which has the world’s largest economy, likely registered 2.5% growth last year – 1.4 percentage points faster than the Bank had expected. It now expects the US’ growth to decrease to 1.6% this year.
Meanwhile, the globe’s second-largest economy, China, is expected to grow 4.5% this year and 4.3% in 2025, going down from 5.2% last year.
For decades, China has been leading global economic growth but several factors have caused a significant slowdown. This is expected to impact developing countries that supply the Chinese market with commodities, like coal from South Africa and copper from Chile.
Meanwhile, Japan’s economy is projected to expand by only 0.9%, which is half the rate of its growth in 2023.
To speed up economic growth, the World Bank suggested an increase in labour force participation, a cut in trade costs, the ramping up of investments in areas like transportation and energy, aligning monetary, fiscal and financial frameworks, and more.
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