The World Bank has forecasted that the global economy will continue to slow down for the third consecutive year in 2024. The bank’s latest annual forecast predicts that the global economy is headed for its weakest half-decade since the early 1990s.
While higher interest rates seem to be bringing inflation under control without causing a serious financial crisis or soaring unemployment, the overall performance of the global economy is lagging, according to Indermit Gill, the bank’s top economist.
After a sharp rebound in 2021 following the pandemic, the global economy saw a growth rate of 3 percent in 2022, which dipped to 2.6 percent last year and is expected to post a modest 2.4 percent this year, lagging behind the 3.1 percent average for the decade of the 2010s.
This continuing slowdown virtually ensures that world leaders will miss the 2030 development goals established by 193 members of the United Nations back in 2015. These goals aimed to transform the global economy by the end of this decade and encompassed ambitious aims such as eliminating extreme poverty, reducing greenhouse gas emissions, boosting education for the poor, and eradicating hunger.
The World Bank’s report highlights the fact that a quarter of the world’s developing countries are now poorer than they were before the pandemic. However, there has been progress in bringing inflation under control, with inflation expected to average 3.7 percent this year, down from 5.3 percent in 2023.
Still, prices are likely to continue rising faster than what central banks deem advisable, and the World Bank warns that global growth could be disrupted by the war in Gaza, ongoing hostilities in Ukraine, and potential shipping disruptions in key trade routes.
Overall, while the World Bank expects the global economy to have a good-but-not-great year, the conditions are more likely to disappoint than produce a positive surprise. In response, the bank suggests implementing policy changes, such as expanded trade and capital flows, and government budget discipline, in order to fuel an investment boom in developing countries and improve economic growth.