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Global Economic Prospects 2024 World Bank

Context:

Recently, the World Bank (WB) has released its Global Economic Prospects Report, which shows that the global economy may witness a poor performance by the end of 2024, the slowest half-decade of GDP (Gross Domestic Product) growth in 30 years.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

  1. Global Economic Outlook 2024: Key Highlights
  2. Recommendations for Global Action
  3. World Bank: A Brief Overview

Global Economic Outlook 2024: Key Highlights

Sluggish Growth Projection:

  • The global economy anticipates the slowest half-decade of GDP growth in thirty years, with a forecasted rate of 2.4% in 2024.
  • Despite the receding risk of a global recession, geopolitical tensions pose fresh near-term hazards.

US Economic Strength:

  • The strength of the US economy contributes to a better global economic position than the previous year, reducing the risk of a recession.

Challenges for Developing Economies:

  • The medium-term outlook worsens for many developing economies, characterized by slowing growth, sluggish global trade, and tight financial conditions.
  • Global trade growth in 2024 is expected to be only half the average of the decade preceding the pandemic.

Borrowing Costs and Debt Concerns:

  • Borrowing costs, especially for developing economies with low credit ratings, are expected to remain high.
  • Global growth is projected to decelerate for the third consecutive year, dropping to 2.4% in 2024.

Developing Economies’ Growth Dilemma:

  • Developing economies are projected to grow at 3.9%, over one percentage point below the previous decade’s average.
  • Low-income countries face challenges, growing at 5.5%, lower than initial expectations.

Implications on Global Priorities:

  • Weak near-term growth, particularly in developing countries, may result in high levels of debt and limited access to food, obstructing progress on global priorities.

Recommendations for Global Action:

Accelerating Investment:

  • Urgent action is required to accelerate investment, emphasizing the need to strengthen fiscal policy frameworks in the current decade.

Addressing Climate Change and Global Goals:

  • The report calls for a ‘formidable’ increase in investment by developing countries, targeting approximately USD 2.4 trillion per year.
  • This investment is crucial to address climate change and achieve key global development goals by 2030.

Comprehensive Policy Packages:

  • Developing economies are urged to implement comprehensive policy packages, encompassing improvements to fiscal and monetary frameworks.
  • Recommendations include the expansion of cross-border trade and financial flows, enhancements to the investment climate, and the strengthening of institutional quality.

World Bank: A Brief Overview

Foundation and Evolution:

  • Established in 1944 as the International Bank for Reconstruction and Development (IBRD), later evolving into the World Bank.
  • A global partnership of five institutions addressing sustainable solutions for poverty reduction and shared prosperity.

Membership and Representation:

  • The World Bank has 189 member countries, including India.
  • As one of the United Nations’ specialized agencies, it plays a crucial role in international development.

Key Reports:

  • Human Capital Index and World Development Report are among the major reports published by the World Bank.

Development Institutions:

  • The World Bank Group comprises five development institutions: IBRD, IDA, IFC, MIGA, and ICSID (International Centre for the Settlement of Investment Disputes), from which India is excluded as a member.

-Source: The Hindu


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