WASHINGTON (AP) — The global economy is on track to slow for the third consecutive year in 2024, hampered by high interest rates, persistent inflation, weak trade and a declining China.
That's the picture painted by the World Bank, which on Tuesday predicted that the global economy will grow by just 2.4% this year. This would be down from rapid growth of 2.6% in 2023, 3% in 2022, and 6.2% in 2021, reflecting the strong recovery from the 2020 pandemic recession.
Rising global tensions, particularly arising from the war between Israel and Hamas and the conflict in Ukraine, pose a risk of further slowing economic growth. And World Bank officials have expressed concern that highly indebted, poor countries cannot afford the investments needed to combat climate change and poverty.
World Bank Director Indermit Gill said: “Short-term growth remains weak and many developing countries, especially the poorest, are trapped, with paralyzing levels of debt and almost one in three “Access to food is scarce,” he said. said the economist in a statement.
In recent years, the global economy has faced a series of shocks, including the pandemic, Russia's invasion of Ukraine, a resurgence in global inflation, and burdensome interest rates imposed by central banks to bring price increases back under control. However, they have proven to be surprisingly resilient. . The World Bank now predicts that the global economy will grow 0.5 points faster in 2023 than expected in June, concluding that “the risk of a global recession has receded.”
Leading the way in 2023 is likely to be the United States, which grew by 2.5% last year, 1.4 percentage points faster than the World Bank had expected mid-year. The World Bank, the anti-poverty agency for 189 countries, expects U.S. growth to slow to 1.6% this year as higher interest rates weaken borrowing and spending.
The Fed has raised U.S. interest rates 11 times since March 2022. Thanks to their hard work, U.S. inflation was able to fall from a 40-year high reached in mid-2022 to near the Fed's 2% target level.
Rising interest rates are also curbing global inflation, with the World Bank expecting inflation to fall from 5.3% last year to 3.7% in 2024 and 3.4% in 2025, still below pre-pandemic averages. exceeds.
China's economy, the world's second largest after the United States, is expected to grow by 4.5% this year and 4.3% in 2025, a sharp slowdown from last year's 5.2%. China's economy has driven global growth for decades, but it has stagnated in recent years and its overbuilt real estate market is collapsing. Youth unemployment is widespread and consumers are depressed. And the population is aging, reducing its ability to grow.
Slowing growth in China is likely to hurt developing countries that supply the Chinese market, such as coal-producing South Africa and copper-exporting Chile.
The World Bank expects the 20 countries that share the euro currency to grow by 0.7% this year, a modest improvement from last year's 0.4% growth. Japan's economy is expected to grow by just 0.9%, half the pace of expansion in 2023.
