Global growth stabilizes for the first time in 3 years

by Business Times writer
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The World Bank’s latest Global Economic Prospects report has revealed that the global economy is projected to stabilize in 2024 for the first time in three years, though this stability will be at a level weaker than recent historical standards.

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.

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.

“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.

“However, growth is at lower levels than before 2020. Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events. Developing economies will have to find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure. The poorest among them—especially the 75 countries eligible for concessional assistance from the International Development Association—will not be able to do this without international support,” he added.


In the East African Community, the report highlights that Rwanda is poised to become the fastest-growing economy in East Africa, with an impressive projected growth rate of 7.6 percent in 2024. This remarkable growth sets Rwanda apart from its regional counterparts, underscoring its dynamic economic trajectory and robust development prospects. 

The report indicates that Uganda and the Democratic Republic of Congo are set to become the second fastest-growing economies within the East African Community, each expected to achieve a robust growth rate of 6.0 percent in 2024. This anticipated growth underscores the significant economic momentum and development potential in both countries, positioning them just behind Rwanda in the regional growth rankings. 

The report further projects that Tanzania will experience a growth rate of 5.4 percent, while Kenya is anticipated to grow at a rate of 5.0 percent. Meanwhile, Burundi is expected to see a growth rate of 3.8 percent, with Somalia slightly behind at 3.7 percent. South Sudan is forecasted to have the lowest growth rate among the East African Community countries, at just 2.0 percent.  


Growth in Sub Saharan Africa (SSA) is projected to pick up from 3 percent in 2023 to 3.5 percent in 2024 and about 4 percent annually in 2025-26, as fading inflationary pressures allow for interest rate cuts, which will support private consumption and investment.

Growth in the region’s largest three economies is expected to accelerate from 1.8 percent in 2023 to 2.4 percent in 2024 and an average of 2.6 percent in 2025-26.

Non-resource-rich economies are forecast to maintain growth above their historical average rate, while resource-rich economies recover from their slow growth in 2023 that mainly reflected declining metal prices.

Per capita GDP in SSA is expected to grow, on average, by a meager 1 percent this year and average 1.4 percent in 2025-26. While non-resource-rich economies are set to experience solid per capita GDP gains in the forecast period, the region’s three largest economies will remain below the region’s average.

“By the end of 2026, per capita GDP in about a quarter of SSA economies will not have recovered to pre-pandemic levels, implying more than half a decade of lost progress in raising living standards and alleviating poverty,” the report reads.


The World Bank explains that risks to the outlook are tilted to the downside. Downside risks include increasing global geopolitical tensions, especially an escalation of the conflict in the Middle East; a further deterioration in regional political stability; increased frequency and intensity of adverse weather events; higher-than-expected inflation; a sharper-than-expected economic slowdown in China; and increased government debt distress, especially if elevated public debt cannot be stabilized or new sources of financing do not become available.

The World Bank also noted that Consumer price inflation could prove to be stickier than expected or pick up again driven, for example, by food price inflation caused by supply disruptions, possibly triggered by an escalation of the conflict in the Middle East.

“Furthermore, extreme weather events raise the likelihood of renewed upward pressure on food prices in affected economies. For instance, the current El Niño weather pattern has brought above average rainfall and flooding to east Africa, but severe drought to southern Africa. An increase in the frequency and severity of droughts or floods would exacerbate poverty across SSA and intensify food insecurity in many countries,” the report reads.

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