The Global Economic Prospects report, 2024 released recently by the World Bank, forecasts the slowest half-decade of GDP growth in 30 years by the end of 2024.
Key Highlights of the Report:
- The report highlights that global trade growth in 2024 is expected to be only half the average of the decade preceding the pandemic.
- It forecasted the slowest half-decade of GDP (Gross Domestic Product) growth in 30 years by the end of 2024.
- Global Economy: Despite a reduced risk of global recession, the medium-term outlook remains challenging due to slowing growth, stagnant trade, and financial difficulties.
- Global Outlook: The global economy, while resilient, faces a dark outlook with growth expected to slow for the third consecutive year in 2024.
- Growth Projections: It is expected to decline from 2.6% to 2.4% in 2024, with developing economies projected to grow by 3.9%, raising concerns about increased poverty.
- Global Growth: It was 6.2% in 2021, declined to 3.0% in 2022, 2.6% in 2023, and is projected to slow down to 2.4% in 2024, with a marginal increase to 2.7% in 2025.
- This is notably below the 3.1% average growth observed in the 2010s.
- Climate Action: To achieve global development goals by 2030, developing countries need investment of about $2.4 trillion per year, with comprehensive policy measures
State of Developing Economies:
- Countries with poor credit ratings, face high borrowing costs amid global interest rates at four-decade highs in inflation-adjusted terms.
- Per capita investment growth in developing economies is expected at only 3.7%, hindering progress and need for a policy package for sustained investment growth.
- Their growth is projected at 3.9%, more than one percentage point below the previous decade’s average.
- Low-income countries could witness weaker growth at 5.5%, raising concerns about increasing poverty levels.
- Among Emerging Market and Developing Economies (EMDEs), commodity exporters contend with fiscal policy procyclicality and volatility.
Recommendations by the World Bank:
- Policy Recommendations: A comprehensive policy package, drawing from experiences over 70 years, to stimulate sustained investment growth in developing economies.
- Across EMDEs, proper macroeconomic and structural policies, and well-functioning institutions, are critical to boost investment and long-term prospects.
- Potential Benefits of Investment: Accelerating per capita investment growth to at least 4% for six years can lead to rapid convergence, decline in poverty, and quadrupled productivity growth.
- Commodity-Exporting Economies: Such countries should avoid boom-and-bust cycles, including fiscal discipline and flexible exchange rates.
- Urgency of Corrective Action: Global growth is expected to remain well below potential for the next half-decade, emphasizing the need for immediate measures.
India’s Growth Scenario:
- India is expected to maintain the fastest growth rate among the world’s largest economies, but post-pandemic recovery may slow, with a marginal deceleration in investment.
- Growth is estimated to rise steadily from 6.3% in 2023-24 to 6.5% in 2025-26, maintaining a robust pace compared to other major economies.
- India’s recovery is supported by higher public investment and improved corporate balance sheets, despite potential constraints on private consumption and government spending.
- The World Bank’s growth estimate for 2023-24 is lower than the first advance estimate recently released by the Ministry of Statistics and Programme Implementation (MoSPI).
| UPSC IAS Preparation Resources | |
| Current Affairs Analysis | Topperspedia |
| GS Shots | Simply Explained |
| Daily Flash Cards | Daily Quiz |