The latest Global Economic Outlook report released by the World Bank today predicts that global economic growth will slow down for the third consecutive year, from 2.6% in 2023 to 2.4% in 2024, nearly three quarters of a percentage point lower than the average level in 2010.
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Medium term prospects
for developing economies
are bleak
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Amidst the slowdown in growth in most major economies, sluggish global trade, and the most tightening financial conditions in decades, the medium-term prospects of many developing economies have become bleak, and their borrowing costs are likely to continue to rise as inflation adjusted global interest rates remain at 40 year highs.
The report predicts that the growth rate of developed economies will slow down from 1.5% in 2023 to 1.2% this year, while developing economies are expected to grow only 3.9% this year, more than a percentage point lower than the average level of the previous decade. By the end of 2024, the population of about 25% of developing countries and about 40% of low-income countrieswill still be poorer than before the COVID-19 outbreak.
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The effect of China's
economic restart is fading
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According to the World Bank's estimate, the growth rate in East Asia and the Pacific region will rebound from 3.4% in 2022 to 5.1% in 2023, mainly due to a brief surge in economic activity in China after lifting the pandemic lockdown measures at the beginning of the year.
However, analysis points out that the effect of China's economic restart is fading quickly:investment growth is being dragged down by the sustained weakness of the real estate industry, and both sales and prices have fallen, increasing the financial pressure on real estate developers; The export sector is facing the challenge of weak external demand, and although consumption has improved at the end of the year, consumer confidence is still far below pre pandemic levels.
The World Bank predicts that the growth rate in East Asia and the Pacific will decrease to 4.5% in 2024 and 4.4% in 2025. But driven by the sustained recovery of the tourism industry, it is expected that the economic growth rate of Pacific island countries will rebound more significantly this year.
China's growth rate is expected
to slow down to 4.5% this year
Meanwhile, it is expected that China's growth rate will decrease to 4.5% in 2024 and further to 4.3% in 2025. The World Bank stated that compared to its forecast in June last year, the growth rates in 2024 and 2025 have both decreased by 0.1 percentage points, mainly due to a weakening of domestic demand.
The World Bank believes that in the context of low sentiment and increased economic uncertainty, it is expected that China's consumption will significantly slow down. In terms of investment growth, although infrastructure spending has provided support, it is expected to remain sluggishdue to the continued weakness of the real estate industry. During the forecast period, structural obstacles such as increased debt, aging and shrinking labor force, and shrinking space for productivity to catch up with growth are expected to put pressure on economic activity.
Economic recovery is a complex and lengthy process that requires our joint efforts. In this process, we should be good at discovering new opportunities, bravely respond to new challenges, and promote sustained and healthy economic development with a positive attitude and innovative thinking.
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