World Bank (WB) has released its Global Economic Prospects Report, which shows that the global economy may witness a poor performance by the end of 2024, the slowest half-decade of GDP (Gross Domestic Product) growth in 30 years.
Key Highlights of the Report
Slowest Half-Decade of GDP Growth in 30 Years
- The global economy is projected to experience the slowest half-decade of GDP growth in three decades, with a growth rate of 2.4% in 2024.
Improved Outlook Compared to Previous Year
- The risk of a global Recession has receded, attributed to the strength of the US economy, resulting in a better global economic position than the previous year.
- But mounting geopolitical tensions could create fresh near-term hazards for the world economy.
Deteriorating Medium-Term Outlook for Developing Economies
- While the global economy is in a better place than a year ago, the medium-term outlook has worsened for many developing economies. Factors include slowing growth, sluggish Global Trade, and tight financial conditions.
Challenges in Global Trade and Borrowing Costs
- Global trade growth in 2024 is expected to be only half the average in the decade preceding the Pandemic.
- Borrowing costs for developing economies, especially those with low credit ratings, are expected to remain high.
Global Growth
- Global growth is projected to slow for the third consecutive year, dropping from 2.6% in 2023 to 2.4% in 2024.
- Developing economies are projected to grow just 3.9%, more than one percentage point below the average of the previous decade.
- Low-income countries are projected to grow by 5.5%, lower than initially expected.
Weak Near-Term Growth and High Debt Levels
- There will be weak near-term growth, particularly in developing countries, leading to high levels of Debt and limited access to food. That would obstruct progress on many global priorities.
Recommendations
- There is a need for urgent action to accelerate investment and strengthen fiscal policy frameworks to avoid a wasted opportunity in the current decade.
- The report advocates for a ‘formidable’ increase in investment by developing countries, approximately USD 2.4 trillion per year, to address climate change and achieve other key global development goals by 2030.
- The developing economies need to implement comprehensive policy packages, including improvements to fiscal and monetary frameworks, expansion of cross-border trade and financial flows, betterment of the investment climate, and strengthening of institutional quality.
World Bank
- It was created in 1944, as the International Bank for Reconstruction and Development (IBRD) along with the IMF. The IBRD later became the World Bank.
- The World Bank Group is a unique global partnership of five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
- The World Bank is one of the United Nations’ specialized agencies.
- It has 189 member countries.
- India is also a member country.