WASHINGTON– The World Bank (WB) warned of the risk of a “decade of wasted opportunities” for the global economy, after the worst growth in the last five years in more than three decades.
The institution expects growth of 2.4% in the global economy for this year, that is, declining for the third consecutive year after reaching 2.6% in 2023, according to its latest outlook report.
This is 0.75 percentage points lower than the average seen since the early 2000s.
With the exception of the sharp recession caused by the Covid-19 pandemic in 2020, this would be the lowest global growth in a year since the 2008 financial crisis.
Latin America
For the Latin American and Caribbean region, the economic outlook “suggests a gradual recovery”, with growth of 2.3% in 2024 and 2.5% in 2025.
“As inflation declines, central banks are expected to lower interest rates, which will reduce obstacles to increased investment,” he notes.
But the economic growth projections for this year are disparate in the region: Brazil (+1.5%), Mexico (+2.6%), Argentina (+2.7%), Colombia (+1.8%) , Chile (+1.8%) and Peru (+2.5%).
In the Caribbean, with the exception of Guyana, which is experiencing a resource boom, the economies are expected to grow by 4.1% and Central America by 3.7% due mainly to a moderate increase in remittances.
In the long term, the region will have to face “persistent challenges” since “the potential for economic growth is declining” in a context marked by the slowdown in productivity and an aging population.
Furthermore, the modest planned regional expansion is exposed to multiple risks, such as an escalation of geopolitical tensions, especially in the Middle East, which could lead to a rise in oil prices, and extreme weather events, which mainly affect agriculture, energy and fishing.
Two other factors are noted: the persistent core inflation of advanced economies and a more abrupt deceleration than expected in the Chinese economy (which goes from growing 5.2% in 2023 to 4.5% this year and 4.3% in 2025).
In general, the World Bank’s predictions are not very optimistic, although it recognizes that “the world economy is in a better situation than a year ago: the risk of a global recession has decreased, largely due to the strength of the United States economy.”
“Without a major course correction, the 2020s will go down in history as a decade of wasted opportunities,” said Indermit Gill, chief economist at the World Bank, quoted in a statement.
“A trap”
“Short-term growth will remain weak and will lead many developing countries, especially the poorest, into a trap: with crippling levels of debt and precarious access to food for almost one in three people,” Add.
Beyond the difficulties for the global economy, the financial organization highlights that the post-covid recovery has been very uneven.
Most advanced economies have returned to levels equivalent to or higher than before the pandemic, but this is not the case for many developing or emerging countries.
“By the end of 2024, we estimate that all developed countries will have a GDP per capita higher than before the pandemic. This ratio is 2/3 for emerging countries and lower for developing countries” and for those “more fragile.” or affected by wars, it is even less than half,” Gill insisted in a telephone press conference.
And without an acceleration in global growth in the coming years, the population “of one in four developing countries will be poorer by the end of the 2020s than before the pandemic,” he said.
Source: With information from AFP
