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Global economy set for weakest performance, says World Bank

The World Bank has said the global economy is set to rack up a sorry record by the end of 2024.

According to the World Bank’s latest Global Economic Prospects report released yesterday, this is the slowest half-decade of gross domestic product (GDP) growth in 30 years.

The report shows that the global economy is in a better place than it was a year ago largely because of the strength of the U.S. economy.

"But mounting geopolitical tensions could create fresh near-term hazards for the world economy," the bank said in a statement.

 The World Bank Group’s Chief Economist and Senior Vice President, Indermit Gill, said: “Without a major course correction, the 2020s will go down as a decade of wasted opportunity. Near-term growth will remain weak, leaving many developing countries—especially the poorest—stuck in a trap: with paralyzing levels of debt and tenuous access to food for nearly one out of every three people. That would obstruct progress on many global priorities. Opportunities still exist to turn the tide. This report offers a clear way forward: it spells out the transformation that can be achieved if governments act now to accelerate investment and strengthen fiscal policy frameworks.”

For Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group, investment booms have the potential to transform developing economies and help them speed up the energy transition and achieve a wide variety of development objectives.

Kose said:  “To spark such booms, developing economies need to implement comprehensive policy packages to improve fiscal and monetary frameworks, expand cross-border trade and financial flows, improve the investment climate, and strengthen the quality of institutions. That is hard work, but many developing economies have been able to do it before. Doing it again will help mitigate the projected slowdown in potential growth in the rest of this decade.”

The report also identifies what two-thirds of developing countries can do to avoid boom-and-bust cycles.

"The report finds that governments in these countries often adopt fiscal policies that intensify booms and busts. When increases in commodity prices boost growth by 1 percentage point, for example, governments increase spending in ways that boost growth by an additional 0.2 percentage point," said the bank.