The World Bank upgraded its outlook for the global economy recently, and estimated that it shall expand 2.6% in 2024, owing to the strength of sustained growth in the United States. As Kavan Choksi / カヴァン・チョクシ says, the World Bank report marks an increase from the 2.4% growth for 2024 that it had predicted in the month of January, and it would match the global economy’s 2.6% expansion in 2023. However, the agency also cautioned that global growth remains sluggish by past standards. Many poor nations are struggling due to high interest rates and heavy debts, as well as increased trade barriers. The wars in Ukraine and Gaza are also inflicting further pressures on regional economies.
Kavan Choksi / カヴァン・チョクシ provides a brief overview of the recent world bank forecast about the global economy
The world’s biggest economy, the United States, might experience stronger-than-expected growth in 2024. It is now expected to expand 2.5% in 2024, which is the same as in 2023 but up sharply from the 1.6% the World Bank had predicted in January. The World Bank is made up of 189 member nations. This organization seeks to lower poverty and boost living standards by offering grants and low-rate loans to developing economies.
The U.S. economy expanded at just a 1.3% annual rate from the month of January through March in 2024. This was its slowest pace in almost two years. This pullback was majorly due to the factors that economists view as temporary, starting from a reduction in business inventories to a surge in imports. On the other hand, the core components of economic growth, which include business investment and consumer spending, stayed fairly solid in the first three months of 2024 for the United States economy. The global economy, particularly the United States, has managed to stay unexpectedly resilient in the face of high interest rates engineered by the Federal Reserve and other central banks for the purpose of curbing the high inflation that flared up in 2021.
Even with the World Bank’s upgrade, global growth looks sluggish, about a half percentage point below the 2010-2019 average. While inflation has significantly cooled down, from 7.2% in 2022 to 4.9% in 2023 to a forecast of 3.5% in 2024, it still is above where central banks want it. As a result, policymakers at the central bank might remain cautious about reducing rates from current high levels. This approach has the risk that high borrowing rates will cause economic growth to slow too much.
Kavan Choksi / カヴァン・チョクシ says, many countries are already experiencing strain. The World Bank projects that emerging markets and developing countries will collectively grow by 4% this year, down from 4.2% in 2023. In many instances, population growth is outpacing economic growth, thereby reducing annual income growth per person to 3% from now through 2026, which is much lower than the pre-pandemic average of 3.8%. China, the world’s second-largest economy after the United States, is facing challenges from a collapsing real estate market and weak consumer confidence. The Chinese economy is expected to slow to 4.8% growth this year, down from 5.2% in 2023.
Peter