The World Bank has upgraded its forecast for global economic growth in 2024 to 2.6%, thanks in large part to the sustained growth in the United States. This marks an increase from the 2.4% growth predicted earlier in the year and matches the expansion seen in 2023. However, the agency warned that global growth is still slow compared to past standards, with the poorest countries struggling under heavy debts and high interest rates. Additionally, increased trade barriers and ongoing conflicts in Ukraine and Gaza pose threats to global prosperity.
The strong growth in the U.S. economy was a significant factor in the World Bank’s upgraded outlook, with the agency now expecting the U.S. economy to expand by 2.5% in 2024. This is the same growth rate as seen in 2023 but a significant improvement from the 1.6% predicted earlier in the year. Despite a slowdown in the first quarter of 2024, the core components of economic growth, such as consumer spending and business investment, remain solid.
Both the global and U.S. economies have shown resilience in the face of high interest rates implemented by central banks to combat inflation. Inflation has cooled down from previous highs but remains above desired levels for central banks. The cautious approach of keeping interest rates high may have its own risks, including the potential for slower economic growth. The World Bank warned that the world could become stuck in a slow lane if this trend continues.
Emerging market and developing countries are expected to grow collectively by 4% in 2024, a slight decrease from the previous year. Many countries are facing challenges due to their populations outpacing economic growth, leading to reduced annual income growth. China, the world’s second-largest economy, is grappling with challenges in its real estate market and weak consumer confidence. Growth forecasts for regions like Latin America, sub-Saharan Africa, and Europe are modest, with varying levels of growth expected.
The World Bank expressed concerns about the restrictions on trade that were imposed by countries worldwide in the past year, largely influenced by geopolitical tensions. World trade barely grew in the previous year and is projected to expand by 2.5% in 2024. The agency emphasized the importance of resolving trade issues through dialogue and cooperation rather than resorting to trade barriers. Overall, the outlook for global economic growth in 2024 remains positive, but challenges persist in various regions of the world.
