Global economy will slow for a third straight year in 2024, World Bank predicts

9 January 2024, 15:04

China Economy
China Economy. Picture: PA

It said the world economy will expand just 2.4% this year.

Hobbled by high interest rates, persistent inflation, slumping trade and a diminished China, the global economy will slow for a third consecutive year in 2024, the World Bank is predicting.

On Tuesday it said the world economy will expand just 2.4% this year. That would be down from 2.6% growth in 2023, 3% in 2022 and a galloping 6.2% in 2021, which reflected the robust recovery from the pandemic recession of 2020.

Heightened global tensions, arising particularly from Israel’s war with Hamas and the conflict in Ukraine, pose the risk of even weaker growth. And World Bank officials express worry that deeply indebted poor countries cannot afford to make necessary investments to fight climate change and poverty.

In recent years, the international economy has proved surprisingly resilient in the face of shock after shock: the pandemic, Russia’s invasion of Ukraine, resurgent global inflation and the burdensome interest rates that were imposed by central banks to try to bring price increases back under control.

“Near-term growth will remain weak, leaving many developing countries, especially the poorest, stuck in a trap: with paralysing levels of debt and tenuous access to food for nearly one out of every three people,” Indermit Gill, the World Bank’s chief economist, said in a statement.

The World Bank now says the global economy grew half a percentage point faster in 2023 than it had predicted in June and concludes that “the risk of a global recession has receded”.

Leading the way in 2023 was the US, which likely registered 2.5% growth last year — 1.4 percentage points faster than the World Bank had expected in mid-year.

The World Bank, a 189-country anti-poverty agency, expects US growth to decelerate to 1.6% this year as higher interest rates weaken borrowing and spending.

The Federal Reserve has raised US interest rates 11 times since March 2022. Its strenuous efforts have helped bring US inflation down from the four-decade high it reached in mid-2022 to nearly the Fed’s 2% target level.

Higher rates are also taming global inflation, which the World Bank foresees sinking from 5.3% last year to 3.7% in 2024 and 3.4% in 2025, though still above pre-pandemic averages.

China’s economy, the world’s second-largest after the US, is expected to grow 4.5% this year and 4.3% in 2025, down sharply from 5.2% last year.

China’s economy, for decades a leading engine of global growth, has sputtered in recent years. Its overbuilt property market has imploded and youth unemployment is rampant. And its population is aging, sapping its capacity for growth.

Slumping growth in China is likely to hurt developing countries that supply the Chinese market with commodities, such as coal-producing South Africa and copper-exporting Chile.

The World Bank expects the 20 countries that share the euro currency to eke out 0.7% growth this year, a modest improvement on 0.4% expansion last year. Japan’s economy is forecast to grow just 0.9%, half the pace of its 2023 expansion.

By Press Association

Latest World News

See more Latest World News

Actress Kim Sae-ron attends 2017 Mnet Asian Music Awards at Asia World-Expo on December 1, 2017 in Hong Kong, Hong Kong.

South Korean ‘Bloodhounds’ and ‘The Man from Nowhere’ star Kim Sae-ron found dead at 24

Exclusive
Jonathan Reynolds told LBC’s Iain Dale that NATO is ‘a highly effective integrated defensive structure’, and that US requests for higher European spending on the alliance are ‘not unreasonable’.

Europe must ‘work closely’ with US to face Russia, Business Sec tells LBC ahead of emergency Ukraine summit

.T. Miller #10 of Team USA and Colton Parayko #55 of Team Canada fight during the first period in the 4 Nations Face-Off game at the Bell Centre on February 15, 2025

Gloves off: Three fights in first nine seconds as USA beat Canada to reach 4 Nations ice hockey final

images shared on social media show police arresting a man following the attack.

'Laughing' Syrian asylum seeker who stabbed boy, 14, to death was motivated by 'Islamic terrorism'

Heavy Rush In Trains For Last Amrit Snan On Prayagraj Kumbh

At least 15 dead in train station stampede in New Delhi

Pope Francis Attends The Weekly General Audience on Wednesday.

Pope Francis to miss Sunday prayer due to 'absolute rest' order after bronchitis diagnosis

Starmer, Trump and Putin.

'Once in a generation moment': Starmer warns against NATO division ahead of emergency summit on Ukraine

Russian President Vladimir Putin (left) and United States President Donald Trump (right).

US officials heading to Russia-Ukraine peace talks in Saudi Arabia

People look into a cordoned off area where a 23-year-old man stabbed several people in the southern Austria city of Villach,.

Boy, 14, killed and five injured after Syrian asylum seeker goes on knife rampage in Austrian town

Police at the scene after the car crashed into protesters.

Mother and her two-year-old daughter die after Munich attack where man ploughed car into crowd

Ukraine war is the ‘front line’ for Europe and UK will up defence spending, Lammy says as Zelensky calls for European army

Ukraine war is ‘front line’ for Europe and UK will up defence spending, Lammy says as Zelensky calls for 'army of Europe'

Flag of the United Kingdom with surveillance camera and barbed wire

UK spending millions on ad campaign painting gloomy picture of Britain to deter Albanian immigrants

Exclusive
The former Deputy Foreign Secretary said: “Many countries in Europe are simply not spending anywhere near, in percentage terms, what America is spending.

UK needs to ‘spend less on welfare and more on defence’ to support Ukraine, former Shadow Foreign Secretary tells LBC

Craig and Lindsay Foreman

British couple on motorbike adventure held in Iran pictured for the first time as family break silence

he Philadelphia Eagles celebrate in front of the Philadelphia Museum of Art during the Philadelphia Eagles Super Bowl Championship Parade on February 14, 2025

Two women shot and injured during Philadelphia Eagles Super Bowl victory parade, police say

President of Ukraine Volodymyr Zelensky speaks during the 61st Munich Security Conference on February 15, 2025 in Munich, Germany.

Zelenskyy calls for creation of ‘European army’ as he warns Russia 'will pull Europe apart' if not defeated