World Bank Forecasts 2024 Global Growth to Slow for Third Consecutive Year

People pose for photographs at a 2024 New Year's signage at a shopping district in Beijing, China, 05 January 2024. (EPA)
People pose for photographs at a 2024 New Year's signage at a shopping district in Beijing, China, 05 January 2024. (EPA)
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World Bank Forecasts 2024 Global Growth to Slow for Third Consecutive Year

People pose for photographs at a 2024 New Year's signage at a shopping district in Beijing, China, 05 January 2024. (EPA)
People pose for photographs at a 2024 New Year's signage at a shopping district in Beijing, China, 05 January 2024. (EPA)

The World Bank warned on Tuesday that global growth in 2024 is set to slow for a third year in a row, prolonging poverty and debilitating debt levels in many developing countries.

Hamstrung by the COVID-19 pandemic, then the war in Ukraine and ensuing spikes in inflation and interest rates around the world, the first half of the 2020s now looks like it will be the worst half-decade performance in 30 years, it added.

Global GDP is likely to grow 2.4% this year, the World Bank forecast in its latest Global Economic Prospects report. That compares to 2.6% in 2023, 3.0% in 2022 and 6.2% in 2021 when there was a rebound as the pandemic ended.

That would make growth weaker in the 2020-2024 period than during the years surrounding the 2008-2009 global financial crisis, the late 1990s Asian financial crisis and downturns in the early 2000s, World Bank Deputy Chief Economist Ayhan Kose told reporters.

Excluding the pandemic contraction of 2020, growth this year is set to be the weakest since the global financial crisis of 2009, the development lender said.

It forecasts 2025 global growth slightly higher at 2.7%, but this was marked down from a June forecast of 3.0% due to anticipated slowdowns among advanced economies.

The World Bank's goal of ending extreme poverty by 2030 now looks largely out of reach, with economic activity held back by geopolitical conflicts.

"Without a major course correction, the 2020s will go down as a decade of wasted opportunity," World Bank Group 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, with paralyzing levels of debt and tenuous access to food for nearly one out of every three people," Gill added.

US spending strong

This year's lackluster outlook comes after 2023 global growth came in an estimated 0.5 percentage point higher than forecast in June as the U.S. economy outperformed due to strong consumer spending.

The US economy grew 2.5% in 2023, 1.4 percentage points higher than its June estimate, the World Bank said. It forecast growth this year to slow to 1.6% as restrictive monetary policy restrains activity amid diminished savings but said this was twice the June estimate.

The eurozone's picture is considerably bleaker, with growth this year forecast at 0.7% after high energy prices resulted in just 0.4% growth in 2023. Tighter credit conditions prompted a 0.6 percentage point cut to the region's 2024 outlook from the bank's June forecast.

China weakens further

China also is weighing on the global outlook as its growth slows to a forecast 4.5% in 2024. That marks its slowest expansion in over three decades outside of the pandemic-affected years of 2020 and 2022.

The forecast was cut 0.1 percentage point from June, reflecting weaker consumer spending amid continued property sector turmoil, with 2025 growth seen slowing further to 4.3%.

"More generally though, weaker growth in China reflects the economy returning to a path of weakening potential growth due to an aging and shrinking population, rising indebtedness that constrains investment and in a sense, narrowing opportunities for productivity to catch up," Kose told reporters.

Emerging market and developing economies as a group are forecast to grow 3.9% this year, down from 4.0% in 2023 and a full percentage point below their average in the 2010s.

That pace is not enough to lift growing populations out of poverty and the World Bank said that by the end of 2024, people in about one out of every four developing countries and 40% of low-income countries will be poorer than they were in 2019, before the pandemic.

Boosting investment

The World Bank said one way to boost growth, especially in emerging market and developing countries would be to accelerate the $2.4 trillion in annual investment needed to transition to clean energy and adapt to climate change.

The bank studied rapid and sustained investment accelerations of at least 4% per year and found that they boost per-capita income growth, manufacturing and services output and improve countries' fiscal positions.

But achieving such accelerations generally requires comprehensive reforms including structural reforms to expand cross border trade and financial flows and improvements in fiscal and monetary policy frameworks, the bank added.



Over 2,000 Local Factories Linked to Saudi Mega Projects

The Saudi NEOM region, showing ongoing construction work on one of the mega projects (Asharq Al-Awsat)
The Saudi NEOM region, showing ongoing construction work on one of the mega projects (Asharq Al-Awsat)
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Over 2,000 Local Factories Linked to Saudi Mega Projects

The Saudi NEOM region, showing ongoing construction work on one of the mega projects (Asharq Al-Awsat)
The Saudi NEOM region, showing ongoing construction work on one of the mega projects (Asharq Al-Awsat)

Saudi Arabia’s Ministry of Industry and Mineral Resources has added over 200 products to the national mandatory list and localized the production of vaccines and biological drugs for around 214 priority treatments.

Additionally, more than 2,000 local factories are now linked to major projects like NEOM, ROSHN, and the Diriyah Gate Development Authority.

A recent report reviewed by Asharq Al-Awsat reveals that the industrial sector saw substantial growth last year, with over 1,300 new licenses issued, attracting more than 81 billion riyals ($21.6 billion) in investments.

Around 1,055 factories began operations with investments of over 45 billion riyals ($12 billion), highlighting significant investor interest and supportive government policies.

By the end of 2023, there were 11,500 factories, with 9,400 operational and 2,100 under construction. National factories received the largest share of investments, followed by foreign and joint ventures.

Total factory investments reached about 1.5 trillion riyals ($400 billion) in 2023, with operational factories accounting for 1.4 trillion riyals ($373.3 billion) and those under construction about 122 billion riyals ($32.5 billion).

The Ministry also helped 13 industrial companies list on the Saudi Stock Exchange (Tadawul) with a combined capital of 2 billion riyals ($533.3 million).

The government also launched a platform for those interested in the Kingdom’s industry landscape, providing data on over 75 investment opportunities, benefiting 100 investors.

Mining Sector

Saudi Arabia’s mining sector continued to grow last year, with over 200,300 active licenses, including 816 issued in 2023. Construction quarries held 64% of the licenses, followed by exploration, exploitation, reconnaissance, and surplus ores.

The Ministry offered five mining licenses for economically viable sites and allocated 15 sites for mining activities for four types of ores. The sector achieved record revenues of over 1.8 billion riyals ($480 million) last year.

Total investments in mining industries reached 443 billion riyals ($118.1 billion), with direct foreign investments in the industry amounting to about 210 billion riyals ($56 billion).