The World Bank’s latest Global Economic Prospects report projects that the global economy will stabilize in 2024, marking the first time in three years. However, this stabilization is anticipated to occur at a level weaker than recent historical standards. Additionally, the report indicates that 80% of the world’s population will experience slower growth compared to the pre-COVID decade.
- 📊 Global Growth Stabilizing After three years of fluctuations, the global economy is projected to stabilize in 2024. This stabilization, however, comes at a level considered weak compared to recent historical standards.
- 📉 Slower Growth for Majority While the global economy stabilizes, 80% of the world’s population is expected to experience slower economic growth compared to the pre-COVID decade. This highlights the uneven recovery across different regions and income groups.
- 🌎 Regional Variations The stabilization of global growth is not uniform across all regions. Emerging markets and developing economies are projected to grow at a faster pace than advanced economies, reflecting their catch-up potential. However, risks such as high inflation and tightening financial conditions remain. Source
Global growth is projected to hold steady at 2.6% in 2024 before edging up to an average of 2.7% in 2025-26. That is well below the 3.1% average in the decade before COVID-19. The forecast implies that over the course of 2024-26 countries that collectively account for more than 80% of the world’s population and global GDP would still be growing more slowly than they did in the decade before COVID-19.
Growth in East Asia and Pacific (EAP) is projected to decline to 4.8 percent this year, as a slowdown in China offsets faster growth in several other large economies. Growth in EAP is then expected to continuing softening, to 4.2 percent in 2025 and 4.1 percent in 2026, as growth in China continues to slow, outweighing a slight pickup elsewhere in the region. Compared with January projections, growth in EAP is expected to be 0.3 percentage point higher in 2024 and 0.2 percentage point lower in 2025.
Overall, developing economies are projected to grow 4% on average over 2024-25, slightly slower than in 2023. Growth in low-income economies is expected to accelerate to 5% in 2024 from 3.8% in 2023. However, the forecasts for 2024 growth reflect downgrades in three out of every four low-income economies since January. In advanced economies, growth is set to remain steady at 1.5% in 2024 before rising to 1.7% in 2025.
Accelerations of activity are expected to be strongest in some of the most export-orientated economies, including Thailand and Viet Nam. The global tourism recovery from the pandemic is nearing completion but continues in EAP where reopening was delayed in some countries, notably in China. This will help boost service exports in some economies, including Cambodia and Thailand. In 2025, growth is expected to edge up to 4.7 percent, and then to 4.8 percent in 2026 as global trade firms and growth rates across the region converge toward potential.
“Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President.
This year, one in four developing economies is expected to remain poorer than it was on the eve of the pandemic in 2019. This proportion is twice as high for countries in fragile- and conflict-affected situations. Moreover, the income gap between developing economies and advanced economies is set to widen in nearly half of developing economies over 2020-24—the highest share since the 1990s. Per capita income in these economies—an important indicator of living standards—is expected to grow by 3.0% on average through 2026, well below the average of 3.8% in the decade before COVID-19.
Global inflation is expected to moderate to 3.5% in 2024 and 2.9% in 2025, but the pace of decline is slower than was projected just six months ago. Many central banks, as a result, are expected to remain cautious in lowering policy interest rates. Global interest rates are likely to remain high by the standards of recent decades—averaging about 4% over 2025-26, roughly double the 2000-19 average.
“Although food and energy prices have moderated across the world, core inflation remains relatively high—and could stay that way,” said Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group. “That could prompt central banks in major advanced economies to delay interest-rate cuts. An environment of ‘higher-for-longer’ rates would mean tighter global financial conditions and much weaker growth in developing economies.”
The latest Global Economic Prospects report also features two analytical chapters of topical importance. The first outlines how public investment can be used to accelerate private investment and promote economic growth. It finds that public investment growth in developing economies has halved since the global financial crisis, dropping to an annual average of 5% in the past decade. Yet public investment can be a powerful policy lever. For developing economies with ample fiscal space and efficient government spending practices, scaling up public investment by 1% of GDP can increase the level of output by up to 1.6% over the medium term.
The second analytical chapter explores why small states—those with a population of around 1.5 million or less—suffer chronic fiscal difficulties. Two-fifths of the 35 developing economies that are small states are at high risk of debt distress or already in it. That’s roughly twice the share for other developing economies. Comprehensive reforms are needed to address the fiscal challenges of small states. Revenues could be drawn from a more stable and secure tax base. Spending efficiency could be improved—especially in health, education, and infrastructure. Fiscal frameworks could be adopted to manage the higher frequency of natural disasters and other shocks. Targeted and coordinated global policies can also help put these countries on a more sustainable fiscal path.
