The World Bank (WB) warned on Tuesday of the risk of a “decade of missed opportunities” for the global economy, while growth over the past five years was the weakest in more than 30 years, according to its perspective report on the global economy.
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The Washington-based institution expects the global economy to grow 2.4% this year, a third straight year of decline after reaching 2.6% last year, according to published data.
That is 0.75 percentage points lower than the average observed since the early 2000s.
With the exception of 2020 and the severe recession caused by the Covid-19 pandemic and the closure of large parts of the global economy, this would be the weakest global growth over a year since the 2008 financial crisis.
To be sure, the report says, “the global economy is in a better position than it risked and has avoided a global recession largely due to the strength of the American economy.”
But renewing geopolitical tensions in the near term and the outlook in most emerging markets in the medium term are raising fears that “the 2020s will be a decade of missed opportunities,” WB chief economist Indermit Gill quoted in the press release.
As a result, growth will be unevenly distributed across regions: from just 1.2% year-on-year in advanced economies to less than 4% in emerging markets, where both private and public investment are slowing.
China, the world's second-largest economy, is expected to fall from 5.2% in 2023 to 4.5% this year and slow further to 4.3% in 2025.
The cause is “a sharp decline in consumption and household spending,” explained Indermit Gill during a telephone press conference, but above all its long-term challenges such as “the aging of the population, debt, reduced investments and fewer opportunities to improve productivity.
Beyond the difficulties for the global economy, the bank emphasizes that the recovery after the Corona crisis has been very uneven from country to country: with advanced economies in most of them returning to levels close to pre-pandemic levels However, in many developing or emerging countries this is not the case.
“By the end of 2024, we estimate that all developed countries will have higher GDP per capita than before the pandemic. This ratio is 2/3 for emerging countries and less for developing countries. For the most fragile or war-affected countries it is even less than half,” emphasized Gill.
And without an acceleration in global growth in the coming years, “people in one in four developing countries will be poorer by the end of the 2020s than before the pandemic,” he said.