“The outlook for 2024 is for the global economy to stabilize, for the first time in three years, although at a level considered low by recent historical standards,” notes the World Bank Group’s latest World Economic Prospects report. today.
Global growth is expected to remain “flat for the first time in three years” in 2024 at 2.6%, reaching an average of 2.7% in 2025-26, which is “significantly lower” than the rate recorded in the decade before Covid-19, it said. OECD expects. World Bank.
“The outlook for 2024 is for the global economy to stabilize, for the first time in three years, although at a level considered low by recent historical standards,” notes the World Bank Group’s latest World Economic Prospects report. today.
In the following two years – 2025 and 2026 – forecasts indicate an average global growth of 2.7%, which is “significantly lower” than the average recorded in the decade before the pandemic (3.1%).
In forecasts issued in January, the World Bank cited global economic growth of 2.4% for 2024 and cut its 2025 forecast by three-tenths, to 2.7%, due to political instability.
According to the Foundation, the now advanced projections mean that “over the period 2024-2026, countries that together represent more than 80% of the population and GDP will rise.” [Produto Interno Bruto] “Global markets will grow at a slower rate than in the decade before Covid-19.”
As for global inflation, the World Bank’s forecast is that it will fall to 3.5% in 2024 and 2.9% in 2025, a rate of decline that is “slower than expected just six months ago.”
As a result, many central banks are expected to remain cautious in lowering official interest rates, and global interest rates are likely to remain high by the standards of recent decades – averaging around 4% between 2025 and 2026, nearly double the average. “2000 – average 2019.”
Overall, developing economies are expected to grow by 4% on average between 2024 and 2025, “slightly slower” than in 2023, with growth reaching 5% in 2024, up from 3.8% in 2023.
“However, the World Bank notes in its report released today that growth projections for 2024 reflect the declines observed in three out of four low-income economies since January.”
In advanced economies, growth is expected to remain stable at 1.5% in 2024, before rising to 1.7% in 2025.
This year, the World Bank expects that “one in four developing economies will remain poorer than in 2019,” before the pandemic, with this proportion “twice as high for countries affected by fragility and conflict.”
“Furthermore, the income gap between developing and advanced economies is expected to widen in almost half of developing countries between 2020 and 2024: the highest proportion since the 1990s,” the report said.
In these economies, per capita income is expected to grow by 3% on average, until 2026, which is “significantly lower” than the average of 3.8% recorded in the decade before Covid-19.
“After four years of turmoil caused by the pandemic, various conflicts, inflation and monetary tightening, global economic growth appears to be stabilizing,” says Chief Economist and Senior Vice President of the World Bank Group.
“However, growth is at lower levels than in the pre-2020 period,” notes Indermeet Gill, highlighting that “prospects for the world’s poorest economies are more worrying,” as they face “punitive levels of debt servicing, constraints potential trade, and climate change.” Events that generate high costs.”
In this context, the World Bank warns that the poorest countries – especially the 75 countries eligible for concessional assistance from the International Development Association – “will not be able to do this without international support.”
The report issued today also includes two analytical chapters, one on how to use public investment to accelerate private investment and boost economic growth, and the other analyzes the reasons why small countries suffer from “chronic financial difficulties.”
Noting that public investment growth in developing economies has fallen by half since the global financial crisis, reaching an annual average of 5% in the past decade, the World Bank argues that public investment “can be a powerful tool for strengthening public policies.”
He asserts that “in the case of developing economies that have ample fiscal space and effective public expenditure management practices, increasing public investment equivalent to 1% of GDP is capable of increasing the level of production by up to 1.6% in the medium term.”
Regarding the “chronic financial difficulties” affecting countries with a population of up to 1.5 million people, the World Bank calls for “comprehensive reforms to address the financial challenges of these small countries.”
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