According to the World Bank, the global GDP will grow at a slower pace in the next few years.
The global economy will grow at a slower pace in 2024, the World Bank predicted with a statement on Wednesday. According to the 189-country agency, the global economy will grow by 2.4% this year, down from 2.6% in 2023 and 3% in 2022.
The reasons behind this slower growth are global tensions fueled by the simultaneous conflicts in Ukraine and the Middle East.
The Russian invasion reached a standstill, with both sides wearing each other out of resources and waning support of Kyiv in the West. Meanwhile, Israel’s invasion of Gaza is causing a humanitarian crisis, and the risk of escalation, with Hezbollah, Iran, and the Houthi Rebels possibly joining the conflict, is always behind the corner.
In 2023, however, the global economy grew larger than predicted by the World Bank. The United States was the main driver of such growth, expanding twice almost as much as forecasted. The American GDP, the largest in the world, is predicted to have grown 2.5% last year, up from the 1.4% predicted.
The other large economies of the world, however, did not fare as well as the US. The Eurozone expanded only by 0.7%, while the UK grew even lower at 0.5%. In general, the European continent was the hardest hit by the Ukraine crisis and still has to recover.
The Chinese dilemma
The most surprising economic outlier in 2023 was China. It’s the only major economy that failed to recover the lost GDP during the pandemic years, growing only by 5.2% in 2023 (Beijing lifted COVID restrictions in December 2022). According to the World Bank, China will grow by 4.5% in 2024 and by 4.3% in 2025.
Lower trading activity with the rest of the world, strong deflation, and a major real estate crisis are believed to have halted China’s meteoric growth. Beijing now controls the second-largest economy in the world but is unlikely to pass the United States this century, as previously believed.
Indeed, China’s crisis is also partially what caused Europe’s loss in economic activity. Germany, Europe’s economic engine, suddenly decreased imports and exports from China. Smaller manufacturing output in both countries, geopolitical tensions, and other economic downturns (namely inflation in Germany and deflation in China) caused this decrease.
For these reasons, China appears willing to ease tensions with the West. Chinese President Xi Jinping met with his American counterpart Joe Biden in San Francisco. The Chinese foreign minister called Sino-American cooperation a “geopolitical imperative”.
Only through such cooperation can the world prosper again, proving the World Bank wrong.
