Analysis of global economic growth expectations and prospects in 2024

The global economy is anticipated to stabilize in 2024 for the first time in three years, but at a lower level compared to recent historical standards, according to the World Bank's latest Global Economic Prospects report.

Global growth is forecasted to remain steady at 2.6% in 2024, increasing slightly to an average of 2.7% in 2025-26. This rate is significantly below the 3.1% average growth rate observed in the decade before the COVID-19 pandemic. This projection indicates that from 2024 to 2026, countries comprising over 80% of the world’s population and global GDP will continue to experience slower growth compared to the pre-COVID-19 decade.

Developing economies are projected to grow at an average rate of 4% over 2024-25, which is slightly slower than the growth rate in 2023. Growth in low-income economies is expected to accelerate to 5% in 2024 from 3.8% in 2023. However, the 2024 growth forecasts have been downgraded for three out of every four low-income economies since January. Advanced economies are expected to maintain steady growth at 1.5% in 2024, rising 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,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President. “However, growth remains at lower levels than before 2020. The prospects for the world’s poorest economies are even more concerning. They face high levels of debt service, restricted trade opportunities, and costly climate events. Developing economies will need to find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure. The poorest among them—especially the 75 countries eligible for concessional assistance from the International Development Association—cannot achieve this without international support.”

This year, one in four developing economies is expected to remain poorer than it was on the eve of the pandemic in 2019. This proportion is twice as high for countries in fragile- and conflict-affected situations. Moreover, the income gap between developing economies and advanced economies is set to widen in nearly half of developing economies over 2020-24—the highest share since the 1990s. Per capita income in these economies, an important indicator of living standards, is expected to grow by 3.0% on average through 2026, well below the average of 3.8% in the decade before COVID-19.

Global inflation is expected to moderate to 3.5% in 2024 and 2.9% in 2025, but the pace of decline is slower than projected six months ago. Consequently, many central banks are likely to remain cautious about lowering policy interest rates. Global interest rates are expected to remain high by recent historical standards, averaging about 4% over 2025-26, roughly double the 2000-19 average.

“Although food and energy prices have moderated globally, core inflation remains relatively high—and could stay that way,” said Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group. “This could prompt central banks in major advanced economies to delay interest-rate cuts. An environment of ‘higher-for-longer’ rates would mean tighter global financial conditions and much weaker growth in developing economies.”

The latest Global Economic Prospects report also includes two analytical chapters on important topics. The first outlines how public investment can be used to accelerate private investment and promote economic growth. It finds that public investment growth in developing economies has halved since the global financial crisis, dropping to an annual average of 5% over the past decade. Nevertheless, public investment can be a powerful policy lever. For developing economies with ample fiscal space and efficient government spending practices, scaling up public investment by 1% of GDP can increase output levels by up to 1.6% over the medium term.

The second analytical chapter explores why small states—those with populations around 1.5 million or less—experience chronic fiscal difficulties. Two-fifths of the 35 developing economies that are small states are at high risk of debt distress or already in it. This is roughly twice the share of other developing economies. Comprehensive reforms are needed to address the fiscal challenges of small states. Revenues could be drawn from a more stable and secure tax base. Spending efficiency could be improved, especially in health, education, and infrastructure. Fiscal frameworks could be adopted to manage the higher frequency of natural disasters and other shocks. Targeted and coordinated global policies can also help put these countries on a more sustainable fiscal path.
 

-----------------------------------------

FTT REAL ESTATE COMPANY

Headquarters in Vietnam: EA4-01.01 Eratown Duc Khai, Nguyen Luong Bang, Phu My Ward, District 7

Receive consignments for buying, selling and renting apartments, updating the best prices in the market

HOTILINE: +(84) 81.299.1003

┃Vietnam Hotline: (+84) 812.991.003

┃Taiwan Hotline: (+886) 956.918.888 

┃Line/ Zalo：0812991003

┃Wechat/ Kakaotalk：FTTland88881

┃Email: vnhanoihcmc@gmail.com

┃Youtube: FTT REAL ESTATE

┃Website : www.fttland.com