World Bank cautions that the global economy expected to experience its lowest growth since the pandemic

The World Bank has issued a warning that the global economy is expected to experience its slowest growth rate since the pandemic. The organization has projected a growth rate of only 2.4% in 2024, citing higher interest rates as a key factor. The World Bank also anticipates that conflicts in Ukraine and the Middle East will continue to hinder global trade and investment. Outside of the pandemic, a growth rate of 2.4% would be the weakest since the 2008-2009 financial crisis. However, the US economy is expected to demonstrate resilience, with last year's growth likely to be recorded at 2.6%. Chief economist Indermit Gill emphasized that developing countries, especially the poorest, would remain trapped in a cycle of weak growth, compounded by issues such as high levels of debt and limited access to food. Gill further stated that global growth is at historically mediocre levels, with sluggishness in global trade. The World Bank's report highlighted the heightened geopolitical risks resulting from the Israel-Hamas conflict, particularly the disruption of key shipping routes and the increased likelihood of inflationary bottlenecks. US Secretary of State Anthony Blinken expressed concern about rising prices caused by the attacks, which have disrupted or diverted nearly 20% of global shipping, increasing the cost and time required to transport essential supplies. This warning comes as central banks worldwide are beginning to address the rising cost of living crisis. While inflation rates are approaching the 2% target in the US, UK, and Eurozone, interest rate hikes could pose challenges for poorer countries. The World Bank is particularly worried about the affordability of borrowing for the 75 poorest nations. Notably, the report highlights that wealthier countries are recovering more effectively from the pandemic compared to poorer nations. In terms of food prices, there is specific concern for the world's poorest individuals, especially considering the 27% increase in the price of rice last year, linked to India's restrictions on exports. However, ample supplies of other crops are expected to cause average food prices to decrease by 1% this year. The report also highlights China's economic challenges, including a reluctance of consumers to spend money, resulting in falling prices. With the additional burden of the country's troubled property sector, China is forecast to achieve a growth rate of only 4.5%, the lowest in decades. This slowdown in China could negatively impact other developed economies, especially those heavily reliant on trade with China. Overall, the World Bank predicts that the five-year period leading up to the end of 2024 will see the slowest global economic growth in 30 years. However, the report suggests that governments can improve this trend by encouraging investment, particularly from the private sector, to address challenges such as climate change and the energy transition.