The World Bank expects global economic growth to decelerate for the third year in a row to a “sorry record by the end of 2024,” hampered by tight monetary policy, restrictive financial conditions, and “feeble global trade and investment.”
It sees the global economy expanding 2.4% in 2024, slowing from last year’s growth rate of 2.6%—and nearly three-quarters of a percentage point lower than the average pace between 2010 and 2019, the World Bank said in its latest Global Economic Prospects report, released Tuesday.
One positive is the risk of a global recession has declined, “largely because of the strength of the U.S. economy,” the World Bank noted.
But broad risks to economic growth remain, including mounting geopolitical tensions and the potential expansion of the Middle East conflict, persistent inflation, and climate-related disasters.
In addition, global trade growth this year is expected to be only half the average rate seen in the decade before the Covid-19 pandemic.
“As the world nears the midpoint of what was intended to be a transformative decade for development, the global economy is set to rack up a sorry record by the end of 2024—the slowest half-decade of GDP growth in 30 years,” wrote Indermit Gill, chief economist and senior vice president for the Washington, D.C.-based World Bank Group.
The outlook for many developing countries has darkened especially, because of slowing growth in most major economies, sluggish global trade, and the tightest financial conditions in decades, the World Bank said.
Developing economies are projected to grow only 3.9% in 2024, more than one percentage point lower than the previous decade’s average.
Advanced economies are expected to see growth slow to 1.2% this year, from 1.5% last year.
The World Bank projects that borrowing costs for developing countries—particularly those with poor credit ratings—are expected to remain elevated, as global interest rates are stuck at four-decade highs in inflation-adjusted terms.
Weak near-term growth will leave 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,” the World Bank said.
By the end of 2024, people in about one out of every four developing countries “will still be poorer than they were on the eve of the Covid pandemic in 2019,” according to the report.
The World Bank said global cooperation is needed to relieve debts, facilitate trade integration, fight climate change, and ease food insecurity. The report was released ahead of the World Economic Forum, where international business and political leaders will discuss global politics, economics, and social issues from Jan. 15 to 19 in Davos, Switzerland.
“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” Gill said.
Per capita investment growth in developing economies is expected to average only 3.7% between 2023 and 2024, just over half the rate of the previous two decades.
The World Bank also offered regional outlooks: Growth is expected to increase 3.8% in sub-Saharan Africa this year; 3.5% in the Middle East and North Africa; and 2.3% in Latin America and the Caribbean.
Growth is expected to edge down to 5.6% this year in South Asia; decelerate to 4.5% this year in East Asia and Pacific countries; and moderate to 2.4% in Europe and Central Asia.
Write to Janet H. Cho at janet.cho@dowjones.com
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