As per the World Bank’s Global Economic Prospects report, the global economy is expected to stabilize for the first time in three years in 2024, however, at a level that is weak by recent historical standards. Kavan Choksi /カヴァン・チョクシ points out that global growth is projected to hold steady at 2.6% in the year of 2024, prior to edging up to an average of 2.7% in 2025-26. This would be well below the 3.1% average in the decade before Covid-19.
Kavan Choksi / カヴァン・チョクシ briefly talks about the global economy’s shift to stability
As per the forecast from the Global Economic Prospects report of the World Bank, over the course of 2024-26, nations that collectively account for more than 80% of the world’s population and global GDP shall be growing more slowly than they did in the decade before Covid-19. Developing economies are projected to grow 4% on average over 2024-25 overall, a bit slower in comparison to 2023. Economic growth in low-income countries is projected to increase to 5% in 2024, up from 3.8% in 2023. Nonetheless, growth projections for 2024 have been downgraded for 75% of these economies since January. Meanwhile, growth in advanced economies is expected to remain stable at 1.5% in 2024, with a slight rise to 1.7% anticipated in 2025.
The global economic growth appears to be steadying, four years after the upheavals caused by the Covid-19 pandemic, inflation, conflicts and monetary tightening. This growth, however, is at lower levels than before 2020. The situation is especially worrisome when it comes to the prospects of the poorest economies of the world. These nations are facing costly climate events, constricting trade possibilities and punishing levels of debt service. Developing economies shall also have to explore ways to lower public debt, encourage private investment, as well as improve education, health, and basic infrastructure. The poorest of these nations, particularly the 75 countries eligible for concessional assistance from the International Development Association, would not be able to face these challenges without international support.
As per Kavan Choksi / カヴァン・チョクシ, in 2024, one in four developing economies is expected to be poorer than it was on the eve of the Covid-19 pandemic. This proportion may be about twice as high for countries in fragile and conflict impacted situations. The income gap between advanced economies and developing economies is set to widen in nearly half of developing economies over 2020-24, which is the highest share since the 1990s. Per capita income in such economies is expected to grow by 3.0% on average through 2026, well below the average of 3.8% in the decade before covid-19. Per capita income is an important indicator of living standards.
Global inflation is projected to ease to 3.5% in 2024 and 2.9% in 2025, but the decline is slower than anticipated six months ago. Consequently, many central banks are expected to be cautious about lowering policy interest rates. Global interest rates are likely to remain elevated by recent historical standards, averaging around 4% during 2025-26, which is approximately double the average from 2000-2019.