{"id":19253,"date":"2024-06-13T03:02:19","date_gmt":"2024-06-13T03:02:19","guid":{"rendered":"https:\/\/energybuzz.ph\/staging\/6915\/world-bank-says-global-growth-stabilizing-but-below-pre-covid-levels\/"},"modified":"2024-06-13T03:02:19","modified_gmt":"2024-06-13T03:02:19","slug":"world-bank-says-global-growth-stabilizing-but-below-pre-covid-levels","status":"publish","type":"post","link":"https:\/\/energybuzz.ph\/staging\/6915\/world-bank-says-global-growth-stabilizing-but-below-pre-covid-levels\/","title":{"rendered":"World Bank says global growth stabilizing but below pre-COVID levels"},"content":{"rendered":"
\n

WASHINGTON \u2014 The World Bank<\/span> on Tuesday said the US economy\u2019s stronger-than-expected per<\/span>for<\/span>mance<\/span> has prompted it to lift its 2024 global growth outlook slightly but warned that overall output would remain well below pre-pandemic levels through 2026.<\/p>\n

The World Bank said in its latest Global Economic Prospects report that the global economy would avoid a third consecutive drop in real GDP growth since a major post-pandemic jump in 2021, with 2024 growth stabilizing at 2.6%, unchanged from 2023.<\/p>\n

That\u2019s up 0.2 percentage point from the World Bank\u2019s January forecast, largely on the strength of US demand.<\/p>\n

\u201cIn a sense, we see the runway for a soft landing,\u201d World Bank Deputy Chief Economist Ayhan Kose told Reuters in an interview, noting that sharply higher interest rates have brought down inf<\/span>lation without major job losses and other disruptions in the US or other major economies.<\/p>\n

\u201cThat\u2019s the good news. What is not good news is that we may be stuck in the slow lane,\u201d Mr. Kose added.<\/p>\n

The World Bank forecast global growth of 2.7% in both 2025 and 2026, a level well below the 3.1% global average in the decade prior to COVID-19. It also is forecasting that interest rates in the next three years will remain double their 2000-2019 average, keeping a brake on growth and adding debt pressure to emerging market countries that have borrowed in dollars.<\/span><\/p>\n

Countries representing 80% of the world\u2019s population and GDP output will see weaker growth through 2026 than they had prior to the pandemic, the report said.<\/p>\n

\u201cProspects for the world\u2019s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities and costly climate events,\u201d said World Bank Chief Economist Indermit Gill, adding that those countries will continue to require international assistance to fund their needs.<\/p>\n

The report contains an alternative \u201chigher-for-longer\u201d interest rate scenario, in which persistent inflation in advanced economies keeps interest rates about 40 basis points above the lender\u2019s baseline forecast, <\/span>cutting 2025 global growth to 2.4%.<\/span><\/p>\n

US BUOYANT
\n<\/b>Strong demand and higher inf<\/span>lation readings in the US have delayed expectations for Federal Reserve rate cuts, and the US economy is defying predictions of a downturn for the second year in a row, according to the report. The World Bank is now forecasting 2.5% US growth for 2024 \u2014 matching the 2023 pace \u2014 and up sharply from the January forecast of 1.6%.<\/p>\n

Mr. Kose said the US upgrade accounts for about 80% of the added global growth since the January forecast.<\/p>\n

The World Bank also upgraded China\u2019s 2024 growth forecast to 4.8% from 4.5% in January, largely on the back of increased exports that have offset soft domestic demand. But it forecast China\u2019s growth will fall to 4.1% in 2025 amid weak investment and consumer confidence and an ongoing property sector downturn.<\/span><\/p>\n

The World Bank retained its growth forecast for the East Asia and the Pacif<\/span>ic region excluding China at 4.6% this year.<\/p>\n

\u201cOver the forecast horizon, GDP growth in most East Asia and the Paci<\/span>f<\/span>ic economies except China \u2014 including Indonesia, Malaysia, and the Philippines \u2014 will be anchored by solid growth of private consumption supported by low in<\/span>f<\/span>lation, declining borrowing costs, and <\/span>f<\/span>irm labor market conditions,\u201d it said.<\/span><\/p>\n

The World Bank projects Philippine GDP growth to average 5.8% in this year and 5.9% both in 2025 and 2026.<\/p>\n

\u201cHeightened uncertainty, related in some cases to recent political transitions and conflict, and including about global trade policies, is expected to dampen private investment,\u201d it said.<\/span><\/p>\n

\u201cIn tandem, rising public debt\u2014which exceeds pre-pandemic levels in most countries in the region\u2014 and budget approval delays are anticipated to constrain public investment growth in some economies.\u201d<\/span><\/p>\n

CONFLICT RISKS
\n<\/b>In addition to the higher-for-longer rate scenario, the World Bank said the biggest downside risks to the global outlook included greater spillovers from armed conf<\/span>licts in Gaza and Ukraine.<\/p>\n

A wider war in the Middle East could cause further disruptions to shipping and push up oil prices and inf<\/span>lation. Likewise, more uncertainty about the path of Russia\u2019s invasion in Ukraine could also disrupt markets for oil and grains, while choking investment into neighboring countries, the bank said.<\/p>\n

Increasing trade restrictions driven by geopolitical rivalries also could hamper the recovery of global trade volume growth, which was barely perceptible last year at about 0.1%. The World Bank forecast a rebound to 2.5% in 2024, up from 2.3% in the January forecast.<\/p>\n

But it said rising protectionism and industrial policies in many countries could lead to more ineff<\/span>iciencies in global supply chains and reduce investment into emerging markets and developing countries.<\/p>\n

The World Bank also said a deeper downturn in China, the world\u2019s second-largest economy, would hamper growth, especially in commodity exporters and trade-intensive economies.<\/p>\n

On the upside, the World Bank said that the US could continue to surpass expectations, boosting global growth with lower inf<\/span>lation if elevated productivity and labor supply due to immigration prove persistent. Lower inf<\/span>lation globally, supported by productivity gains, improved supply chains and easing commodity prices, could prompt central banks to cut interest rates more quickly than now expected, boosting credit growth, the bank added. \u2014 Reuters<\/b> with inputs from<\/i> BMDC<\/b><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

WASHINGTON \u2014 The World Bank on Tuesday said the US economy\u2019s stronger-than-expected performance has prompted it to lift its 2024 global growth outlook slightly but warned that overall output would remain well below pre-pandemic levels through 2026. 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