Xinhua Finance and Economics, Washington, January 10 (Reporter Xu Yuan) Dragged down by multiple factors such as global monetary policy tightening and weak global investment, global economic growth may slow down further in 2024. International organizations are calling for global economies to work together to provide debt relief, promote integration, tackle climate change and alleviate food insecurity. Experts pointed out that promoting investment and strengthening fiscal policy reforms will help reverse the decline.
The World Bank released the latest "Global Economic Prospects Report" on the 9th, and the global economic growth rate is expected to fall to 2 in 2024 under the effect of factors such as monetary policy tightening, limited financial conditions, and weak global investment4%, which is the third consecutive year of decline and lower than the average of the past decade. At the same time, the growth is expected to decrease by 02 percentage points, less than 3% in 2022. This year, global** growth is expected to be only half of the pre-pandemic 10-year average.
At the same time, the medium-term outlook for many developing economies has darkened amid slowing growth in most major economies, a global downturn, and the tightest financial conditions in decades, and borrowing costs, especially for those with poor credit ratings, are likely to remain high as global interest rates remain high, weighing on economic developments.
However, the World Bank believes that the risk of a global recession has largely been diminished with the help of strong US economic growth, and the likelihood of a "soft landing" for the economy "seems to be increasing." The World Bank expects global economic growth to pick up to 2.2 in 20257%。But this level is also lower than the 3% projected in June 2023.
The World Bank expects emerging market and developing economies to grow by 3.0 percent this year9%, which is 01 percentage point, which is also more than 1 percentage point lower than the average of the past decade. Among them, China's economy may grow by 5% last year and this year2% and 45%。The Russian economy will grow by 26% and 13%。
In particular, the report noted that low-income economies performed "disappointingly" last year, with growth expectations of just 3.5%, and growth is expected to pick up to 5 this year5%, but it was also weaker than previously expected. By the end of this year, about 25 percent of people in developing economies and about 40 percent of people in low-income economies will still be poorer than they were before the pandemic in 2019.
In addition, advanced economies are expected to grow by 15%, but this year it fell to 12%。Among them, the U.S. economy is expected to grow by 25%。However, the growth rate may slow to 1 this year, dragged down by high interest rates restricting economic growth6%。The outlook for growth in the eurozone is bleak, with growth expected to be as low as 04%, and the growth rate this year is also as low as 07%。
Looking ahead, downside risks to global growth remain, including the recent escalation of the Israeli-Palestinian conflict and the possibility of higher inflation from a spike in commodities**. At the same time, financial stress, persistent inflation, fragmentation, and climate-related disasters could also hurt global growth. The World Bank warns that poverty and debt levels will continue to worsen in many developing economies.
In the report, the World Bank calls on global economies to work together to provide debt relief, promote integration, combat climate change, and alleviate food insecurity. Commodity exporters from emerging market and developing economies should continue to grapple with fiscal policy pro-cyclicality and volatility.
The report recommends that developing economies, especially commodity-exporting countries, can reduce the volatility of fiscal policy by establishing fiscal frameworks that help control spending, adopt flexible exchange rate regimes, and avoid restricting international capital flows. According to the World Bank, these policy measures can help developing economies and commodity-exporting countries increase GDP per capita growth by about 1 percentage point every four to five years.
At the same time, for all emerging market and developing economies, appropriate macroeconomic and structural policies, as well as well-functioning institutional institutions, are essential to promote investment and long-term prospects.
Ayhan Goss, Deputy Chief Economist and Principal of the World Bank, noted that the investment boom has the potential to transform developing economies to accelerate their energy transition and achieve their broader development goals. To trigger an investment boom, developing economies need to put in place a comprehensive policy mix, improve fiscal and monetary frameworks, expand cross-border and financial flows, optimize the investment environment, and improve institutional institutions.
To combat climate change and meet other key global development goals by 2030, the report suggests that developing economies will need to significantly increase investment to about 2.2 per year per yearUS$4 trillion, with a comprehensive policy mix to achieve a significant capital increase. Otherwise, per capita investment growth in developing economies is expected to be only 3.0% from 2023 to 20247%, about half the level of the previous two decades.
Indamit Gill, the Bank's chief economist and senior vice president, said the 2020s would be a "decade of missed opportunities" without major adjustments. He said that the recent weakness in global economic growth has left many developing economies, especially the poorest, in trouble, including a mountain of debt pressures and food insecurity for nearly a third of the population. This will hinder progress on many global priorities.
Gill believes that there is still a chance for the global economy to turn around. Economies** should urgently embark on the major shifts that can be achieved by accelerating investment and strengthening fiscal policy frameworks.
Editor: Tan Rui.
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