World Bank Forecasts Slow Global Economic Growth for Next Two Years
The World Bank's latest “Global Economic Prospects” report presents a concerning outlook for the global economy, predicting that it will experience its weakest half-decade of growth in 30 years. The forecast anticipates a continuous slowdown, with global growth expected to decrease to 2.4% in 2024, a slight drop from 2.6% in 2023. Despite a marginal increase to 2.7% projected for 2025, the overall growth rate for this five-year period remains significantly below the average rate of the 2010s.
The report attributes this slowdown to escalating geopolitical tensions, particularly the war in Eastern Europe and conflicts in the Middle East, which pose risks to energy prices and subsequently to inflation and economic growth. Ayhan Kose, the World Bank’s deputy chief economist, emphasized the potential impact of these conflicts on global economies in his conversation with CNBC’s Silvia Amaro.
This downturn is expected to affect regions differently, with North America, Europe and Central Asia, and Asia-Pacific experiencing the most significant slowdowns, partly due to slower growth in China. Latin America and the Caribbean might see a slight improvement, while the Middle East and Africa are predicted to have more notable economic recoveries.
Developing economies, however, face a particularly challenging future. Hindered by slow global trade and tight financial conditions, their growth is estimated to be considerably lower than in the previous decade. The World Bank warns that many people in these regions may end their year poorer than before the Covid-19 pandemic in 2019.
The World Bank's report also highlights a concerning scenario: without significant changes, the 2020s could become a decade defined by missed opportunities in addressing extreme poverty, communicable diseases, and climate change. The organization urges governments to act swiftly to boost investment and strengthen fiscal policies. Kose stresses the importance of comprehensive policy packages to improve fiscal and monetary frameworks, enhance trade, investment climates, and strengthen institutional quality.
The report comes just ahead of the World Economic Forum, where global leaders will gather to discuss these pressing issues. The World Bank's findings underscore the need for proactive and concerted efforts to mitigate the anticipated economic slowdown and achieve transformative progress in the coming decade.