World Bank raises global growth forecast

The World Bank revised its global economic outlook upwards, now projecting a 2.6 per cent expansion in 2024, largely driven by robust growth in the United States, surpassing its previous estimate of 2.4 per cent made in January.

However, despite this optimism, the bank warns of persistent sluggishness in global growth, exacerbated by heavy debt burdens in poorer countries, rising trade barriers, and the destabilising impacts of global unrest.

The US economy’s better-than-expected performance, accounting for 80 per cent of the upgraded outlook, reflects a projected 2.5 per cent expansion for 2024, matching 2023 levels and significantly surpassing the earlier forecast of 1.6 per cent for the year.

While the first quarter saw a slowdown in US growth due to temporary factors like increased imports and reduced business inventories, core drivers like consumer spending and business investment remained robust.

Global and US economies have demonstrated resilience in the face of high interest rates aimed at curbing inflation, which has cooled from 7.2 per cent in 2022 to a forecasted 3.5 per cent in 2024. However, this growth remains below the pre-pandemic average, and concerns linger regarding the potential negative impacts of prolonged high interest rates on economic growth worldwide.

Emerging markets are expected to grow collectively by 4 per cent in 2024, slightly down from 4.2 per cent in 2023, with income growth per person lagging behind population growth in many cases.

China’s economy faces challenges from a faltering real estate market and weak consumer confidence, with growth projected to slow to 4.8 per cent in 2024 from 5.2 per cent in 2023.

Latin America is forecasted to see growth slowing to 1.8 per cent in 2024 from 2.2 per cent in the previous year, while sub-Saharan Africa is expected to grow by 3.5 per cent, up from 3 per cent in 2023.

European countries in the eurozone, impacted by geopolitical tensions like the conflict between Russia and Ukraine, are projected to see modest growth of 0.7 per cent in 2024, an improvement from 0.4 per cent in 2023.

Japan’s economy, hindered by sluggish consumer spending and weakening exports, is forecasted to slow to 0.7 per cent growth in 2024 from 1.9 per cent in 2023.

Trade restrictions surged globally in the past year, reflecting geopolitical tensions, with world trade barely growing in 2023 and expected to expand by a modest 2.5 per cent in 2024. The World Bank emphasises the importance of dialogue and cooperation over trade barriers to foster global growth.

Attribution: Associated Press (AP) citing the World Bank Global Economic Prospects.