The World Bank raised its global economic growth forecast for this year to 2.6%, up from January’s 2.4%, driven by strong U.S. economic expansion. However, it warns that climate change, wars and high debt will negatively impact developing nations, particularly in Sub-Saharan Africa and the Middle East, where growth estimates have been lowered.
The U.S. GDP outlook was significantly upgraded to 2.5% from 1.6%. The World Bank also upgraded China’s 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’s growth will fall to 4.1% in 2025 amid weak investment and consumer confidence and an ongoing property-sector downturn. It left its 2024 euro zone forecast unchanged at 0.7% amid the bloc’s continued difficulties with high energy costs and weaker industrial output.
Global inflation is expected to decrease to 3.5% this year and 2.9% in 2025, though slower than previously projected. Central banks are likely to maintain higher interest rates, averaging around 4% in 2025-2026.
The World Bank emphasizes the difficulties developing economies face in attracting private investment, reducing public debt and improving essential services. The 75 nations eligible for interest-free lending will require international support. Additionally, weak global trade poses significant risks, with the next few years predicted to be the worst for trade growth since the 1990s.
