For the first time in three years, the global economy is expected to stabilise in 2024, according to the World Bank’s latest Global Economic Prospects report. However, this stabilisation is at a lower level than in recent years.
Global growth is projected to be steady at 2.6% in 2024 and slightly increase to an average of 2.7% in 2025-26. This is below the 3.1% average growth seen in the decade before the COVID-19 pandemic. Countries accounting for more than 80% of the world’s population and GDP are expected to grow more slowly than they did before the pandemic.
Growth in developing economies is expected to average 4% over 2024-25, slightly slower than in 2023. Low-income economies are projected to grow by 5% in 2024, up from 3.8% in 2023. However, three out of every four low-income economies have had their growth forecasts downgraded since January. Growth in advanced economies is forecast to remain steady at 1.5% in 2024 and rise to 1.7% in 2025.
“Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying. However, growth is at lower levels than before 2020. Prospects for the world’s poorest economies are even more worrisome,” Indermit Gill, the World Bank Group’s Chief Economist, noted.
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Developing economies face high levels of debt, limited trade opportunities, and costly climate events. Many will need international support to boost private investment, reduce public debt, and improve education, health, and infrastructure, the World Bank noted. The income gap between developing and advanced economies is set to widen in nearly half of developing countries over 2020-24, the highest since the 1990s. Per capita income in developing economies is expected to grow by 3.0% on average through 2026, below the pre-pandemic average of 3.8%.
Meanwhile global inflation is expected to come down to 3.5% in 2024 and 2.9% in 2025, but the decline is slower than projected six months ago. Many central banks are likely to keep interest rates high, averaging about 4% over 2025-26, which is double the 2000-19 average.
Ayhan Kose, the World Bank’s Deputy Chief Economist, warned, “Although food and energy prices have moderated across the world, core inflation remains relatively high—and could stay that way. That could prompt central banks in major advanced economies to delay interest-rate cuts.”
While global growth is stabilizing, the recovery remains uneven and slower than desired, especially for developing and low-income countries. International support and strategic policy measures will be crucial to navigating these challenges and fostering a more inclusive and sustainable global economic recovery, the World Bank emphasized.
