Washington, United States — The global economy is on track for a woeful decade of growth unless policymakers can boost investment and strengthen government balance sheets, the World Bank warned Tuesday.
Global growth is set to slow from an estimated 2.6 percent in 2023 to 2.4 percent this year, 0.75 percentage points below the average of the 2010s, the World Bank said in its latest report on the health of the global economy.
If the forecast proves accurate, 2024 would mark the third consecutive year of worldwide economic deceleration, and the slowest half-decade of GDP growth for 30 years.
“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” World Bank Chief Economist Indermit Gill said in a statement.
“Near-term growth will remain weak, leaving many developing countries –especially the poorest — stuck in a trap,” he added.
Growth in advanced economies is expected to slow to just 1.2 percent this year, the Bank said, while emerging market and developing economies should see growth ease slightly to 3.9 percent.
US, China to stall
After seeing reasonable growth in 2023, the United States and China — the world’s two largest economies — are both likely to slow in the year ahead, the World Bank said.
US growth is forecast to ease from 2.5 percent in 2023 to 1.6 percent this year, while growth in China — long a key engine of the global economy — is also forecast to fall, from 5.2 percent to 4.5 percent.
China’s slowdown follows a year in which the country rebounded after implementing strict pandemic-era rules, and is the result of subdued consumer sentiment and longer-term structural issues.
“The slowing growth in China presents a headwind to other developed economies, especially those for which China is a major trade partner,” World Bank deputy chief economist Ayhan Kose told reporters ahead of the report’s publication.
“However, the nature of China’s slowdown means these effects are likely to be more modest than the headline growth numbers might suggest,” he added.
Turn the tide
Despite the many challenges facing the global economy in the year ahead, “opportunities still exist to turn the tide,” said Gill, the chief economist.
He added that if governments acted to “accelerate investment and strengthen fiscal policy frameworks,” it can still transform economic growth in developing economies, many of which remain poorer than they were before the Covid-19 pandemic.
The World Bank calculated that by accelerating investment growth and then sustaining it for some years, developing economies could catch up with advanced economies’ income levels, cut poverty and boost productivity.
Such investment “booms” have rapidly also improved internet access, caused inflation to fall and improve governments’ fiscal positions, according to the report.