Global economic growth is projected to stabilize this year at 2.6 percent, a slight uptick of two tenths from January’s forecast, with the World Bank predicting a 2.7 percent expansion in both 2025 and 2026 as outlined in the latest edition of the World Economic Outlook.
The IMF’s partner institution notes that 2024 will mark the first stabilization in three years, though growth remains weak by historical standards. Likewise, the projected pace of 2.7 percent for 2025 and 2026 sits well below the pre-pandemic average of 3.1 percent, reminding readers that the economies representing more than 80 percent of the global population and GDP are expected to keep growing at a slower clip than in the years before COVID-19.
In aggregate, developing economies are anticipated to rise by about 4 percent on average during 2024-25, a touch lower than 2023. By contrast, lower-income economies are seen accelerating to around 5 percent in 2024, up from roughly 3.8 percent in 2023. Meanwhile, advanced economies are expected to hold steady near 1.5 percent in 2024 and pick up to 1.7 percent in 2025.
Indermit Gill, the World Bank’s chief economist and senior vice president, commented that four years after pandemic shocks, conflicts, inflation, and tighter monetary policy, the global economy appears to be stabilizing, albeit at a weaker pace than desired.
Among developed economies, the World Bank’s new projections include a notable upgrade for the United States. Growth is now seen at 2.5 percent in 2024, nine-tenths higher than January’s forecast, with 2025 and 2026 seen at 1.8 percent each year, slightly higher than earlier expectations for the near term.
Conversely, the euro area is expected to post a 0.7 percent expansion in 2024, in line with January projections after a 0.5 percent rise in 2023. For 2025 and 2026, the forecast is trimmed to 1.4 percent and 1.3 percent respectively.
Among the major emerging and developing markets, China is projected to slow to about 4.8 percent in 2024 from 5.2 percent in 2023, a three-tenths improvement over the prior forecast. However, 2025 is seen at 4.1 percent and 2026 at 4.0 percent as the year progresses.
Russia encompasses a different trajectory, with anticipated growth of 2.9 percent in 2024, up from 3.6 percent in 2023 and a 1.4 percent expansion in 2025, followed by about 1.1 percent in 2026—a modest improvement over January’s outlook.
Gill warned that the outlook for poorer economies remains more fragile. High debt burdens, limited trade opportunities, and costly climate events complicate growth prospects in those countries, underscoring the risk of a widening gap between rich and poor.
The World Bank also cautions that about one in four developing economies could still be poorer in 2024 than they were on the eve of the pandemic in 2019, highlighting persistent vulnerabilities despite broader gains.
Regarding inflation, the global rate is expected to ease to about 3.5 percent in 2024 and 2.9 percent in 2025, though the pace of decline has slowed compared with forecasts six months earlier. Central banks are likely to keep policy rates near the current level for longer, with an average around 4 percent during 2025-26, roughly double the average seen from 2000 to 2019.
Ayhan Kose, the World Bank’s head economist for global perspectives, noted that while food and energy prices have eased, core inflation remains stubbornly high and could persist at elevated levels for some time.
The report suggests that this environment may force major economies to delay cutting rates. In a world of higher rates for longer, financial conditions could tighten and growth in developing economies may slow further.
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