CHONGQING, CHINA – The global economy is facing a significant slowdown, with growth rates projected to be the lowest in three decades, according to the World Bank’s latest “Global Economic Prospects” report released on Tuesday. The report forecasts that global growth will dip to 2.4% in 2024, following a third consecutive year of slowed growth. This marks a decline from the 2.6% growth rate recorded in 2023.
The World Bank cited geopolitical tensions, such as the Russian invasion of Ukraine and conflicts in the Middle East, as potential challenges that could further hamper economic growth. The organization warned that these conflicts could have significant implications for energy prices and inflation, exacerbating the already sluggish growth rates.
Furthermore, the report highlighted the need for a “major course correction” in order to prevent the 2020s from being known as a “decade of wasted opportunity.” Developing economies are expected to bear the brunt of the slowdown, as global trade remains sluggish and financial conditions tighten. The World Bank projects a growth rate of just 3.9% for developing economies in 2024, significantly lower than the previous decade’s average.
The consequences of this slowed growth are dire, particularly for the poorest nations. The World Bank estimates that by the end of 2024, approximately 40% of low-income countries and one-fourth of developing countries will still have a lower income compared to pre-pandemic levels in 2019.
While the data paints a bleak picture, the World Bank suggests that there is still an opportunity to reverse this trend. Governments are urged to take swift action by increasing investment and strengthening fiscal policies. The report emphasizes the potential for investment booms to transform developing economies and facilitate the transition to cleaner sources of energy.
To achieve this transformation, the World Bank advises developing economies to implement comprehensive policy packages that improve fiscal and monetary frameworks, enhance cross-border trade and financial flows, and strengthen institutional quality. These efforts, although challenging, have proven successful in the past and can mitigate the projected slowdown in potential growth throughout the rest of the decade.
In conclusion, the World Bank’s report highlights the worrisome state of the global economy, with growth rates expected to be the lowest in 30 years. Geopolitical tensions and sluggish global trade pose significant challenges, particularly for developing economies. The report emphasizes the urgent need for governments to take action and increase investment to mitigate the economic slowdown. Failure to do so could result in a lost decade marked by missed opportunities.