The World Bank has upgraded its outlook for the global economy, estimating that it will expand 2.6 per cent in 2024 on the strength of sustained growth in the United States.

The bank’s latest outlook is a step up from its previously projected 2.4 per cent growth for 2024.

However, the Washington-headquartered multilateral is cautioning that global growth remains sluggish by past standards and that the poorest countries are struggling under the weight of heavy debts and high interest rates as well as increased trade barriers, which are endangering prosperity worldwide.

The brutal wars in Ukraine and Gaza are inflicting further pressures on regional economies but stronger-than-expected growth in the United States, the world’s biggest economy has accounted for 80 per cent of the upgraded outlook.

The World Bank now expects the US economy to expand 2.5 per cent in 2024, the same as in 2023 but up sharply from the 1.6 per cent it had predicted in January. Made up of 189 member nations, the World Bank seeks to reduce poverty and boost living standards by providing grants and low-rate loans to developing economies.

It expects emerging market and developing countries to collectively grow four per cent this year, down from 4.2 per cent in 2023. 

Populations outpacing their economies 

In many cases, their populations are outpacing their economies, reducing their annual income growth per person to three per cent this year through 2026 — far below the average 3.8 per cent in the decade before the pandemic struck. China, the world’s second-largest economy after the United States, is struggling with the collapse of its real estate market and with weak consumer confidence. 

The Chinese economy is expected to decelerate to 4.8 per cent this year, from 5.2 per cent in 2023. Growth in Latin America is forecast to slow from 2.2 per cent last year to 1.8 per cent in 2024. The World Bank expects the economy of sub-Saharan Africa to grow 3.5 per cent, modest but up from three per cent last year.

The 20 countries that share the euro currency, hurt by the consequences of Russia’s war against Ukraine, are expected to eke out 0.7 per cent growth in 2024, though that would be nearly twice their 0.4 per cent growth in 2023.

The World Bank expects Japan’s economic growth, hobbled by sluggish consumer spending and flagging exports, to slow to 0.7 per cent this year from 1.9 per cent in 2023. Countries around the world last year imposed a record number of measures to restrict trade, partly a consequence of geopolitical tensions, especially between the United States and China. 

Measured by volume, world trade barely grew last year — 0.1 per cent — and is forecast to expand by a still-meagre 2.5 per cent in 2024. The World Bank says it worries that faltering trade will hold back global growth.