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.



Safe-Haven Gold Firms as Biden Move Sparks Market Uncertainty

A jeweler shows a gold bar at his shop in downtown Kuwait City on May 20, 2024. (Photo by YASSER AL-ZAYYAT / AFP)
A jeweler shows a gold bar at his shop in downtown Kuwait City on May 20, 2024. (Photo by YASSER AL-ZAYYAT / AFP)
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Safe-Haven Gold Firms as Biden Move Sparks Market Uncertainty

A jeweler shows a gold bar at his shop in downtown Kuwait City on May 20, 2024. (Photo by YASSER AL-ZAYYAT / AFP)
A jeweler shows a gold bar at his shop in downtown Kuwait City on May 20, 2024. (Photo by YASSER AL-ZAYYAT / AFP)

Gold prices firmed on Monday as the dollar eased following US President Joe Biden's decision to withdraw from the 2024 presidential race, with investors turning to bullion as a hedge against an uncertain political and market outlook.
Spot gold rose 0.2% at $2,405.40 per ounce, as of 0510 GMT, while US gold futures gained 0.3% to $2,407.20, Reuters reported.
The prospect of rate cuts and political uncertainty in the United States are supporting gold prices, and conditions are in place for gold to see another record high before the end of 2024, said Kyle Rodda, a financial market analyst at Capital.com.
Making bullion more attractive to buyers holding other currencies, the dollar eased in the initial reaction to US President Joe Biden abandoning his reelection bid, clearing the way for another Democrat to challenge Donald Trump.
When accepting the Republican nomination on Thursday, Trump reiterated his promise to cut corporate taxes and interest rates. Analysts also expect a Trump presidency would make for tougher trade relations, which could result in inflationary tariffs.
"I think there is an almost unstoppable process of decoupling between the US and China, it will only become more severe or accelerate if it is a Trump presidency. Gold will certainly benefit from greater geopolitical tensions," Rodda said.
Prices scaled an all-time high of $2,483.60 last week on increased chances of US interest rate cuts this year, with markets pricing in a 97% chance of a cut in September, according to the CME FedWatch Tool.
On the data front, the main focus this week will be on Friday's US personal consumption expenditures (PCE) figure and other data including July S&P Global flash PMIs, advance second-quarter GDP, and weekly jobless claims.
Among other metals, spot silver fell 0.5% to $29.11 per ounce, platinum slipped 0.3% to $959.99, while palladium rose 1.1% to $916.18.