World Bank expects 2024 global growth slowdown, again

The global economy may be starting the new year on unstable footing. In a new report, the World Bank predicted international GDP growth would slow for the third straight year and cap off the weakest half-decade performance in 30 years.

“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” Indermit Gill, the World Bank’s chief economist and SVP for development economics, said in a statement. “Near-term growth will remain weak, leaving many developing countries—especially the poorest—stuck in a trap: with paralyzing levels of debt and tenuous access to food for nearly one out of every three people. That would obstruct progress on many global priorities.”

The World Bank projects global growth will slow from 2.6% in 2023 to 2.4% this year, “almost three-quarters of a percentage point below the average of the 2010s.” Slowed growth reflects “the lagged and ongoing effects of tight monetary policies to rein in decades-high inflation, restrictive credit conditions, and anemic global trade and investment,” according to the report.

The strong US economy has quashed concerns of a global recession for now, but geopolitical conflicts present new global economic risks, the World Bank warned. “The medium-term outlook has darkened for many developing economies amid slowing growth in most major economies, sluggish global trade, and the tightest financial conditions in decades.”

The agency expects economic growth in advanced economies to slow from 1.5% in 2023 to 1.2% this year. It projects that developing economies, meanwhile, will grow “just 3.9%, more than one percentage point below the average of the previous decade.”

What’s more, “by the end of 2024, people in about one of every four developing countries and about 40% of low-income countries will still be poorer than they were on the eve of the Covid pandemic in 2019,” according to the report.

Gill said economies can still beat the World Bank’s bleak predictions if government leaders “act now to accelerate investment and strengthen fiscal policy frameworks.”