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The global economy in five charts

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Global Economic Prospects—June 2024 Cover

Global growth is projected to stabilize at 2.6 percent this year, holding steady for the first time in three years despite flaring geopolitical tensions and high interest rates. By 2025–26, growth is expected to edge up to 2.7 percent alongside modest expansions in trade and investment, according to the Global Economic Prospects Report.

 Reflecting continued inflationary pressures, central banks in both advanced economies and emerging market and developing economies (EMDEs) are likely to remain cautious in easing policy. As such, interest rates over the next few years are set to be markedly higher than prior to the pandemic. Escalating geopolitical tensions, further trade fragmentation, and persistently high policy rates are some of the downside risks weighing on the global outlook.

The global outlook remains subdued. The global economy is stabilizing but the outlook remains subdued by historical standards—both advanced economies and EMDEs are projected to grow at a slower pace over 2024–26 compared to the pre-pandemic decade.

Lower growth prospects relative to the pre-pandemic decade are widespread. In 2024–25, growth is set to underperform its average pace in the 2010s in nearly 60 percent of economies, representing more than 80 percent of global output and population. Against this backdrop, income per capita in EMDEs is forecast to grow at an average rate of 3 percent in 2024-26, well below its 2010-19 average and with almost half of EMDEs expected to fall behind advanced economies over 2020–24. 

The potential for further trade fragmentation amid heightened uncertainty is a key risk. The number of trade-distorting policy measures has already tripled in 2022–24 compared to the 2017–19 period. Proliferating trade restrictions and heightened trade policy uncertainty—already at an unusually high level relative to previous years with major elections since 2000—could weigh on trade prospects and economic activity. 

Central banks are likely to keep rates elevated over the forecast horizon. Inflation continues to wane globally, but at a slower pace than previously envisaged. As a result, advanced-economy interest rates are expected to remain above 2000–19 average levels and could turn out higher still if inflationary pressures persist, substantially slowing global growth. 

Risks to the outlook, while more balanced, remain tilted to the downside. Conflict-related disruptions to oil supply could result in sizable oil price increases. Persistent inflation in advanced economies could see interest rates remain higher for longer. These developments could result in significantly weaker global growth.

Nikita Perevalov

Senior economist in the Prospects Group of the World Bank

Vasiliki Papagianni

Research analyst, World Bank's Prospects Group

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