WORLD BANK WARNS OF ENERGY PRICE SURGE IF WAR SPREADS
Global growth is projected to slow for third straight year
The global economy is at risk of a “wasted” decade and the weakest stretch of growth in 30 years, the World Bank warned Tuesday, saying a sluggish recovery from the pandemic and crippling wars in Ukraine and the Middle East are expected to weigh heavily on output.
In its semiannual Global Economic Prospects report, the World Bank projected that the growth in world output will slow further in 2024, declining to 2.4 percent from
2.6 percent. Although the global economy has been surprisingly resilient, the report
warned that its forecasts were subject to heightened uncertainty because of the two wars, a diminished Chinese economy and the increasing risks of natural disasters caused by global warming.
The converging crises in recent years have put the world economy on track for the weakest half-decade in 30 years.
“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” said Indermit Gill, the World Bank Group’s chief economist.
Global growth is projected to slow for the third straight year in 2024. Developing countries are bearing the brunt of the slowdown, with high borrowing costs and anemic trade volumes weighing on their economies.
Although policymakers have made progress in bringing inflation down from its 2022 high, the war in the Gaza Strip between Israel and Hamas is threatening to become a broader conflict that could spur a new bout of price increases by causing the cost of oil and food to spike.
“The recent conflict in the Middle East, coming on top of the Russian Federation’s invasion of Ukraine, has heightened geopolitical risks,” the report said. “Conflict escalation could lead to surging energy prices, with broader implications for global activity and inflation.”
The disruptions to shipping routes follow a year in which, other than during worldwide recessions, global trade growth was the slowest in the past 50 years, according to the World Bank.
Chinese growth is expected to slow to 4.5 percent this year from 5.2 percent in 2023.
Europe and the United States are also poised for another year of weak output in 2024.
The World Bank projects that economic growth in the euro area will rise to 0.7 percent in 2024 from 0.4 percent in 2023.
Growth in the United States is expected to slow to 1.6 percent this year from 2.5 percent in 2023.