Global Economic Growth Forecast
The World Bank’s latest report projects a deceleration in global economic growth for 2024, with a forecasted growth rate of 2.4%, down from the estimated 2.6% in the previous year. However, the bank does not anticipate a recession.
Factors for the Slowdown
The slowdown is attributed to weaker global trade and the impact of high interest rates set by central banks to combat inflation.
“Soft Landing” Scenario Predicted
Although many central banks are expected to cut interest rates, the World Bank sees the global economy achieving a “soft landing” in 2024, averting a recession while bringing down inflation.
Risks to the Global Economy
Various risks such as high debt, borrowing costs, trade disruptions, climate-related disasters, and a slower-than-expected growth in China pose challenges for the global economy.
Economic Performance in the US
The US is expected to experience a slowdown in growth as high real interest rates discourage consumer spending, leading to depleted savings and a weaker job market.
Impact of Inflation and Interest Rates
While overall inflation has decreased, core inflation remains high in advanced economies, leading the World Bank to predict a slow reduction in interest rates and higher long-term market rates compared to pre-pandemic levels.
Hot Take
The global economy is forecasted to slow down in 2024, primarily due to key factors like weaker global trade and high interest rates. While the risk of recession is low, several challenges, including inflation and interest rates, continue to pose significant impacts to economic growth across various regions.
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