World Bank Warns of Continued Global Economic Slowdown
Recent analysis by the World Bank hints at a global economic slowdown for the third consecutive year in 2024. Despite this, the forecast avoids predicting a recession, foreseeing a drop in the global growth rate to 2.4% from an estimated 2.6% in the prior year.
As disclosed by Yahoo Finance, the World Bank’s latest report on Global Economic Prospects projects a 2.7% growth for the global economy in 2025. The current year’s sluggishness is attributed to weakened global trade and the impact of aggressive interest rate adjustments by central banks aiming to tackle inflation.
Although there are expectations that several central banks will lower interest rates throughout the year, the World Bank remains cautiously optimistic about a “soft landing” scenario in 2024. This scenario aims to bring down inflation without triggering a recessionary spiral.
The robust performance of the US economy in the past year, marked by a surprising addition of 216,000 jobs in December, has spurred speculation about potential interest rate cuts by the Federal Reserve. Yet, the World Bank has sounded a note of caution, highlighting potential inflationary sparks due to Middle East conflicts and potential spikes in commodity prices.
Meanwhile, Bitcoin’s valuation has soared by more than 170% in the last 12 months, with major asset managers entering the market following BlackRock’s move to initiate the race for the first spot Bitcoin exchange-traded fund (ETF) listing in the US.
Multiple risks loom over the global economy, including financial strain from high debt and borrowing costs, disruptions in trade, climate-induced disasters, and an underwhelming economic performance expected from China. China’s growth is anticipated to slow to 4.5%, largely influenced by a declining property sector, marking its slowest growth rate in 30 years, excluding the pandemic period.
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In the US, growth is projected to ease to 1.6%, with high real interest rates acting as a hindrance. Consumer spending might take a hit due to dwindling savings, escalating borrowing expenses, and a less vibrant job market.
Despite declining headline inflation worldwide, core inflation, excluding the volatile food and energy prices, remains stubbornly high, especially in advanced economies with robust job markets. Consequently, the World Bank envisions a gradual decline in interest rates in these economies, leading to higher long-term market rates compared to pre-pandemic levels.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
