According to a report by the World Bank published in January, the global economy is expected to experience its slowest growth in 30 years during the first half of this decade.
As per the report, the current decade was expected to be a turning point in the field of development. However, contrary to expectations, the global economy is projected to record a decline in the growth rate of global GDP in the first half of this year, which is expected to continue until the end of 2024.
According to the report, the global economy is currently in a better situation than it was a year ago. This is due to the reduced risk of a worldwide recession, mainly because of the stability of the US economy. However, the report warns that increasing geopolitical tensions in the near future may create new threats to the global economy.
In the opinion of World Bank experts, the medium-term outlook for several emerging economies has worsened due to sluggish growth in most significant economies, stagnation in global trade, and the strongest tightening of credit conditions in decades.
The experts stated that global trade growth is predicted to be half of what it was before the pandemic in 2024. Additionally, borrowing costs for emerging economies, especially those with low credit ratings, are expected to remain high due to the increased global interest rates. The report focuses on interest rates over the past 40 years, adjusted for inflation.
The global economic growth is expected to slow down for the third year in a row, falling to 2.4% this year from 2.6% last year, which is nearly three-quarters of a percentage point below the 2010 average, according to the World Bank.
The World Bank predicts that the emerging economies will experience a growth rate of no more than 3.9%. This is more than one percentage point lower than the average rate of the past decade. Additionally, the Bank expects that the low-income countries will grow by 5.5% which is less than their previous expectations. Last year, the performance of the low-income countries was disappointing.
According to the financial institution, it is estimated that by the end of 2024, the population of nearly one in four developing countries and approximately 40% of low-income countries will remain impoverished compared to 2019. Meanwhile, the growth rate for advanced economies is projected to decrease to 1.2% this year, down from 1.5% in 2023.
