Global economy will slow for a third straight year in 2024, World Bank predicts

9 January 2024, 15:04

China Economy
China Economy. Picture: PA

It said the world economy will expand just 2.4% this year.

Hobbled by high interest rates, persistent inflation, slumping trade and a diminished China, the global economy will slow for a third consecutive year in 2024, the World Bank is predicting.

On Tuesday it said the world economy will expand just 2.4% this year. That would be down from 2.6% growth in 2023, 3% in 2022 and a galloping 6.2% in 2021, which reflected the robust recovery from the pandemic recession of 2020.

Heightened global tensions, arising particularly from Israel’s war with Hamas and the conflict in Ukraine, pose the risk of even weaker growth. And World Bank officials express worry that deeply indebted poor countries cannot afford to make necessary investments to fight climate change and poverty.

In recent years, the international economy has proved surprisingly resilient in the face of shock after shock: the pandemic, Russia’s invasion of Ukraine, resurgent global inflation and the burdensome interest rates that were imposed by central banks to try to bring price increases back under control.

“Near-term growth will remain weak, leaving many developing countries, especially the poorest, stuck in a trap: with paralysing levels of debt and tenuous access to food for nearly one out of every three people,” Indermit Gill, the World Bank’s chief economist, said in a statement.

The World Bank now says the global economy grew half a percentage point faster in 2023 than it had predicted in June and concludes that “the risk of a global recession has receded”.

Leading the way in 2023 was the US, which likely registered 2.5% growth last year — 1.4 percentage points faster than the World Bank had expected in mid-year.

The World Bank, a 189-country anti-poverty agency, expects US growth to decelerate to 1.6% this year as higher interest rates weaken borrowing and spending.

The Federal Reserve has raised US interest rates 11 times since March 2022. Its strenuous efforts have helped bring US inflation down from the four-decade high it reached in mid-2022 to nearly the Fed’s 2% target level.

Higher rates are also taming global inflation, which the World Bank foresees sinking from 5.3% last year to 3.7% in 2024 and 3.4% in 2025, though still above pre-pandemic averages.

China’s economy, the world’s second-largest after the US, is expected to grow 4.5% this year and 4.3% in 2025, down sharply from 5.2% last year.

China’s economy, for decades a leading engine of global growth, has sputtered in recent years. Its overbuilt property market has imploded and youth unemployment is rampant. And its population is aging, sapping its capacity for growth.

Slumping growth in China is likely to hurt developing countries that supply the Chinese market with commodities, such as coal-producing South Africa and copper-exporting Chile.

The World Bank expects the 20 countries that share the euro currency to eke out 0.7% growth this year, a modest improvement on 0.4% expansion last year. Japan’s economy is forecast to grow just 0.9%, half the pace of its 2023 expansion.

By Press Association

Latest World News

See more Latest World News

Debris on the ground after helicopter crash, with people looking on

Four killed as helicopter ambulance crashes on take-off in Turkey

People walking amongst rubbled and the remains of homes

Five children among 22 killed in Israeli strikes on Gaza

A couple embrace in front of a sea of flowers outside a church

What is known about the German Christmas market attack and its impact

Police officer at cordon beside Christmas market stalls

German authorities were warned about Christmas market attack suspect last year

Pope Francis on large screen in front of faithful in St Peter's Square

Pope in plea for ceasefires to end ‘cruelty’ of conflicts around the world

Man checking wiring outside damaged high-rise building

Russian fuel depot hit by Ukrainian drones for second time

The nine-year-old boy killed in the attack has been pictured.

'Fly little angel': Heartbroken mum pays tribute to boy, 9, killed in German Christmas market attack

US Air Force F/A-18 fighter jet performs its solo aerobatic display at the Singapore Airshow

US military accidentally shoots down one of its own fighter jets

Clean-up truck operating in a Christmas market

Four women and boy confirmed as those killed in German Christmas market attack

Palestinians round fire in camp

Displaced Palestinians enduring winter with little protection from cold

Police outside shop building with damaged doors

Five hurt as truck being chased by police driven through department store

Hundreds gathered to pay tribute on Saturday night.

Christmas market attack suspect appears in court as Germany probes Saudi warnings

China Taiwan US

China says US ‘playing with fire’ after latest military aid for Taiwan

December 8, 2024: Tunis, Tunisia. 08 December 2024. In this photo illustration the TikTok logo is displayed on an i

Albania to ban TikTok for a year after lawmakers blame app for teen stabbing

Blake Lively looking over her shoulder as she poses for photographers in front of a giant white letters spelling out It Ends With Us

Blake Lively accuses It Ends With Us director of harassment and smear campaign

A view of the TikTok app logo

Albania to ban TikTok for a year amid claims it promotes violence among children