The latest Global Economic Prospects report from the World Bank paints a somber picture for the global economy, anticipating a continued slowdown for the third consecutive year in 2024. Projections indicate a further decrease in global economic growth, down to 2.4 percent in 2024 and a slight uptick to 2.7 percent in 2025, notably below the 3.1 percent average witnessed in the 2010s.
The report reflects a downward trend from the 6.2 percent growth in 2021, attributed to the pandemic's low base impact, to 3 percent in 2022, and then 2.6 percent in 2023. Factors contributing to this sluggish growth include the lasting effects of the COVID-19 crisis, the Ukraine conflict, and subsequent surges in inflation and interest rates globally, resulting in what the report labels as potentially the most challenging first half of a decade in 30 years.
Indermit Gill, the World Bank's chief economist, expressed concerns, highlighting that the projected growth performance until 2024 might fall short of expectations. This period was initially envisioned as transformative, aiming to eradicate extreme poverty, eliminate major communicable diseases, and significantly cut greenhouse-gas emissions. However, these ambitions might face setbacks due to the economic downturn.
Comparatively, the growth outlook during the 2020-2024 period is expected to be weaker than the period surrounding the 2008-2009 global financial crisis, as stated by World Bank Deputy Chief Economist Ayhan Kose.
Amidst these global concerns, the report outlines India's growth prospects, foreseeing a slight increase from 6.3 percent in 2023-24 to 6.4 percent in 2024-25 and 6.5 percent in 2025-26. Despite maintaining the fastest growth rate among the largest economies globally, India's post-pandemic recovery is anticipated to decelerate gradually.
The report notes that while investment is likely to taper off slightly, it will remain robust, supported by heightened public investment and enhanced corporate balance sheets, notably in the banking sector.
(With Agency Inputs)
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