Why in the News?
The Global Economic Prospects Report from the World Bank (WB) indicates a potentially lackluster performance for the global economy by the conclusion of 2024, marking the slowest half-decade of Gross Domestic Product (GDP) growth in three decades.
Global GDP Growth
The report predicts a slowdown in global GDP growth from 2.7% in 2023 to 2.4% in 2024.
Developing economies, struggling to recover from the pandemic, face challenges like high debt and investment shortfalls.
Many low-income nations are expected to experience moderate growth due to factors such as high-interest rates, geopolitical conflicts, slow international trade, and climate-related disasters.
India’s Perspective
South Asia is estimated to grow by 5.2% in 2024, with India being the fastest-growing large economy.
India's projected growth is 6.2% in 2024, driven by domestic demand, manufacturing, and services.
Inflation
Global headline inflation is expected to decline from 8.1% in 2022 to an estimated 5.7% in 2023 and further to 3.9% in 2024.
Food price inflation remains critical, contributing to food insecurity and poverty in developing countries.
Climate Change
Extreme weather events in 2023, like wildfires, floods, and droughts, have direct economic impacts.
Climate change projections indicate potential global GDP losses of 10-23% by 2100 without mitigation.
Investment
Global investment growth remains low due to economic uncertainties, high debt, and rising interest rates.
Developed nations prioritize sustainable sectors, while developing countries face challenges in attracting foreign investment.
Labour Market
Developed countries experience a robust recovery with low unemployment rates and rising wages.
Developing countries show mixed progress, with challenges in informal employment, gender gaps, and high youth unemployment.
AI Impact on Global Employment
AI adoption has rapidly advanced since 2022, with one-third of global firms using generative AI.
AI could reduce demand for low-skilled jobs, raising concerns about gender gaps and impacts on lower-income countries.
Trade
Global trade growth weakened to 0.6% in 2023, expected to recover to 2.4% in 2024.
Factors like geopolitical tensions, supply chain disruptions, and pandemic effects hinder global trade.
International Finance and Debt
Rising external debt and increased interest rates pose challenges for developing countries' access to international capital markets.
Decline in official development assistance and foreign direct investment compounds financial constraints.
Multilateralism and Sustainable Development
The report emphasizes the need for strengthened global cooperation, especially in climate action, sustainable development financing, and addressing debt sustainability challenges.
Multilateralism plays a crucial role in navigating the global economic landscape and achieving UN-mandated Sustainable Development Goals.
Conclusion
The 2024 Global Economic Prospects Report paints a cautious picture, projecting a global GDP growth slowdown to 2.4%. While South Asia, led by India, shows resilience, challenges persist for developing economies, including high debt and climate-related issues. Concerns span food price inflation, slow global investment, and the impact of rapid AI adoption on employment. The report underscores the need for strengthened global cooperation, advocating multilateralism to address climate action, sustainable development financing, and debt sustainability, emphasizing the pursuit of UN-mandated Sustainable Development Goals.
Note for UPSC Aspirants: For UPSC aspirants interested in exploring further, here are some keywords to guide your research:Pradhan Mantri Developing Economies, GDP, Sustainable Development Goals, Artificial Intelligence, Climate Change, Inflation, World Bank, Multilateralism.
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