/ The World Bank expected, on Tuesday, that the global economy would record its lowest and slowest performance in three decades, and a slowdown in growth in the Middle East.
The bank stated in its latest report on global economic prospects that the global economy will record “unfortunately” rates of GDP growth by the end of 2024, the lowest and slowest in a period of 5 years over 30 years, according to the “CNBC Arabia” economic network.
He stressed that “the conflict that recently erupted in the Middle East led to an increase in uncertainty at the geopolitical level and at the policy level in the region, and also led to weak tourism-related activity, especially in neighboring countries.”
He added, “The region has already faced many negative developments, including reduced oil production, high inflation rates, and weak private sector activity in oil-importing countries. In 2023, the growth rate in the Middle East and North Africa region will slow sharply to reach 1.9%.”
The World Bank believes that despite the strength of the US economy, which has supported the global economy in general, “escalating geopolitical tensions could create new risks facing the global economy in the near term.”
The bank continued, “At the same time, medium-term prospects have become bleak for many developing economies amid slowing growth rates in most major economies, as well as a slowdown in global trade, and the most tightened financial conditions in decades. It is expected that global trade growth in 2017 will not exceed 2024 is half the average in the ten years before the Corona pandemic.
At the same time, borrowing costs for developing economies – especially those with weak credit ratings – are likely to remain high with global interest rates remaining at their highest levels in 40 years after excluding the impact of inflation, he noted.
The bank noted that global growth is also expected to slow for the third year in a row, from 2.6% last year to 2.4% in 2024, about three-quarters of a percentage point lower than the average prevailing in the second decade of the twenty-first century.
Developing economies are expected to grow at just 3.9%, a rate slightly more than one percentage point below the average achieved in the previous decade. After a disappointing performance last year, low-income countries are expected to achieve rates of 5.5%, lower than previously expected.
By the end of 2024, people in 1 in 4 developing countries and about 40% of low-income countries will still be poorer than they were before the outbreak of the Corona pandemic in 2019. As for advanced economies, the growth rate is expected to slow to 1.2% this year. Down from 1.5% in 2023.
Commenting, Indermeet Gill, World Bank Group Chief Economist and Senior Vice President, said: “Unless there is a major course correction, the 10 years from 2020 to 2030 will be a decade of missed opportunities, and growth will remain weak in the near term, creating confusion.” “In many developing countries, especially the poorest ones, high debt rates will strain the capabilities of these countries, and it will be very difficult to provide food for approximately one in three people.”
“This will hamper progress towards meeting many global priorities.”
In terms of potential opportunities, Ayhan Kosi, Deputy Chief Economist and Director of the Development Prospects Group at the World Bank, said: “Investment booms can transform developing economies and help accelerate the pace of the transition in energy use, as well as achieving a wide variety of development goals.
To achieve these breakthroughs, developing economies must implement comprehensive policy packages to improve fiscal and monetary policy frameworks, increase cross-border trade and financial flows, improve the investment climate, and strengthen the quality of institutions. This is hard work, but many developing economies have managed to do it before.
Doing so again will help mitigate the expected slowdown in potential growth for the remainder of this decade.”
According to the latest World Bank reports, the growth rate in East Asia and the Pacific is expected to slow to 4.5% in 2024, and 4.4% in 2025. While growth in Europe and Central Asia is expected to decline to 2.4% in 2024, before rising to 2.7%. % in 2025.
In Latin America and the Caribbean, growth is expected to increase to 2.3% in 2024, and to 2.5% in 2025. In South Asia, growth is expected to decline to 5.6% in 2024, before rising to 5.9% in 2025. In South Africa Desert, growth is expected to rise to 3.8% in 2024, and to continue rising to 4.1% in 2025.
In the Middle East and North Africa region, growth is expected to increase to 3.5% in 2024, and to remain at this rate in 2025.
In its in-depth look at the Middle East, the World Bank explained that in oil-exporting countries, the oil sector witnessed a noticeable weakness due to production cuts.
It is estimated that the growth rate in the GCC countries has slowed sharply in 2023 due to a decline in oil production, and this slowdown has exceeded the strong activity in the non-oil sector. In other oil-exporting countries, growth rebounded in countries that were exempted from the OPEC agreement to cut production.
Growth in oil-importing countries also slowed somewhat last year, reflecting weak private sector activity. Food inflation remained persistently high, while at the same time the significant depreciation of the currency led to a rise in the overall inflation rate.
In Egypt, growth is estimated to slow in the 2022/2023 fiscal year (from July 2022 to June 2023) due to restrictions on imports, a decline in household purchasing power, and a slowdown in corporate and business activity.
On the other hand, it is estimated that growth has rebounded in Morocco, despite the earthquake that occurred in September 2023, with the agricultural sector recovering.
According to the report, the conflict in the Middle East has increased uncertainty about the region’s growth prospects.
Assuming the conflict does not escalate, the growth rate in the Middle East and North Africa region is expected to increase to 3.5% in 2024 and 2025. Forecasts were revised upward, compared to what was expected last June, reflecting stronger-than-expected growth rates in oil-exporting countries, and this supports the recovery in oil activity.
The growth rate in the Gulf Cooperation Council countries is expected to rise to 3.6% in 2024 and 3.8% in 2025.
In Saudi Arabia, growth is expected to rebound due to increased oil production and exports, despite the extension of the voluntary reduction in oil production into this year.
At the level of other oil-exporting countries, such as Algeria and Iraq, it is expected that increased production in early 2024 will contribute to accelerating the pace of growth.
In oil-importing countries, the growth rate is expected to rise to 3.2% this year and 3.7% in 2025. The growth rate will rise in some countries, especially in Djibouti, Morocco and Tunisia, but countries close to conflict will be more affected.
In Egypt, the conflict will likely exacerbate the inflation problem, restrict private sector activity, and increase pressures on foreign transaction accounts due to declining tourism revenues and remittances from Egyptians abroad. The conflict will also negatively affect the tourism sector in Jordan.
The economic prospects for the West Bank and Gaza Strip are still shrouded in great uncertainty, as growth is expected to contract by 6% in 2024, after contracting by 3.7% in 2023.
The massive destruction of fixed assets in Gaza will lead to a significant contraction of economic activity. The ongoing conflict will also exacerbate the already deteriorating economic conditions in the West Bank.
If the intensity of the conflict subsides, reconstruction efforts are expected to contribute to a recovery in growth to reach 5.4% in 2025.