The World Bank’s forecasts for growth in 2024 reflect downgrades in three out of every four low-income economies since January
The income gap between developing economies and advanced economies is set to widen in nearly half of developing economies over 2020-24—the highest since 1990s. Photo: Wikimedia Commons
The global economy is on course to stabilise for the first time since the COVID-19 pandemic, according to the World Bank. However, the growth will still be weak by historical standards.
Global growth is projected to stabilise at 2.6 per cent in 2024 before edging up to an average of 2.7 per cent in 2025-26, the World Bank noted in its report titled Global Economic Prospects.
“That is well below the 3.1% average in the decade before COVID-19. The forecast implies that over the course of 2024-26 countries that collectively account for more than 80% of the world’s population and global GDP would still be growing more slowly than they did in the decade before COVID-19,” a press statement issued by the World Bank mentioned.
It noted that overall, developing economies are projected to grow 4 per cent on an average over 2024-25, slightly slower than in 2023.
Also, growth in low-income economies is expected to accelerate to five per cent in 2024 from 3.8 per cent in 2023. However, manifesting the deep disparities in economic progress around the world, the forecasts for 2024 growth reflect downgrades in three out of every four low-income economies since January.
In developed economies, growth is set to remain steady at 1.5 per cent in 2024 before rising to 1.7 per cent in 2025.
“Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying,” Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President was quoted in the press release.
Talking about the slow pace of recovery and prosperity amongst the underprivileged population around the world, Gill stated :
“However, growth is at lower levels than before 2020. Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events. Developing economies will have to find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure.”
“The poorest among them—especially the 75 countries eligible for concessional assistance from the International Development Association—will not be able to do this without international support,” he added.
According to the World Bank, this year, one in four developing economies is expected to remain poorer than it was on the eve of the pandemic in 2019. This proportion is twice as high for countries in conflict-affected situations.
It asserted that the income gap between developing economies and advanced economies is set to widen in nearly half of developing economies over 2020-24—the highest share since the 1990s.
Additionally, the per capita income in these economies—an important indicator of living standards—is expected to grow by 3.0 per cent on average through 2026, well below the average of 3.8 per cent in the decade before COVID-19.
“Global inflation is expected to moderate to 3.5% in 2024 and 2.9% in 2025, but the pace of decline is slower than was projected just six months ago. Many central banks, as a result, are expected to remain cautious in lowering policy interest rates. Global interest rates are likely to remain high by the standards of recent decades—averaging about 4% over 2025-26, roughly double the 2000-19 average,” the press statement added.
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