Context:
Recently, the World Bank (WB) has released its Global Economic Prospects Report, which shows that the global economy may witness a poor performance by the end of 2024, the slowest half-decade of GDP (Gross Domestic Product) growth in 30 years.
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- Global Economic Outlook 2024: Key Highlights
- Recommendations for Global Action
- World Bank: A Brief Overview
Global Economic Outlook 2024: Key Highlights
Sluggish Growth Projection:
- The global economy anticipates the slowest half-decade of GDP growth in thirty years, with a forecasted rate of 2.4% in 2024.
- Despite the receding risk of a global recession, geopolitical tensions pose fresh near-term hazards.
US Economic Strength:
- The strength of the US economy contributes to a better global economic position than the previous year, reducing the risk of a recession.
Challenges for Developing Economies:
- The medium-term outlook worsens for many developing economies, characterized by slowing growth, sluggish global trade, and tight financial conditions.
- Global trade growth in 2024 is expected to be only half the average of the decade preceding the pandemic.
Borrowing Costs and Debt Concerns:
- Borrowing costs, especially for developing economies with low credit ratings, are expected to remain high.
- Global growth is projected to decelerate for the third consecutive year, dropping to 2.4% in 2024.
Developing Economies’ Growth Dilemma:
- Developing economies are projected to grow at 3.9%, over one percentage point below the previous decade’s average.
- Low-income countries face challenges, growing at 5.5%, lower than initial expectations.
Implications on Global Priorities:
- Weak near-term growth, particularly in developing countries, may result in high levels of debt and limited access to food, obstructing progress on global priorities.
Recommendations for Global Action:
Accelerating Investment:
- Urgent action is required to accelerate investment, emphasizing the need to strengthen fiscal policy frameworks in the current decade.
Addressing Climate Change and Global Goals:
- The report calls for a ‘formidable’ increase in investment by developing countries, targeting approximately USD 2.4 trillion per year.
- This investment is crucial to address climate change and achieve key global development goals by 2030.
Comprehensive Policy Packages:
- Developing economies are urged to implement comprehensive policy packages, encompassing improvements to fiscal and monetary frameworks.
- Recommendations include the expansion of cross-border trade and financial flows, enhancements to the investment climate, and the strengthening of institutional quality.
World Bank: A Brief Overview
Foundation and Evolution:
- Established in 1944 as the International Bank for Reconstruction and Development (IBRD), later evolving into the World Bank.
- A global partnership of five institutions addressing sustainable solutions for poverty reduction and shared prosperity.
Membership and Representation:
- The World Bank has 189 member countries, including India.
- As one of the United Nations’ specialized agencies, it plays a crucial role in international development.
Key Reports:
- Human Capital Index and World Development Report are among the major reports published by the World Bank.
Development Institutions:
- The World Bank Group comprises five development institutions: IBRD, IDA, IFC, MIGA, and ICSID (International Centre for the Settlement of Investment Disputes), from which India is excluded as a member.
-Source: The Hindu
