WORLD BANK'S GLOBAL ECONOMIC PROSPECTS REPORT
1. Context
India will remain the fastest-growing major economy recording a steady growth of 6.7 per cent in the next three years including the current financial year, said a World Bank report released on 11/06/2024
2. What are the Key Highlights of the Report?
- According to the World Bank, the global economy is projected to face a significant downturn by the end of 2024, potentially marking the slowest GDP growth in three decades, highlighting the urgent need for a major course correction.
- Increasing geopolitical tensions may introduce new short-term risks to the global economy, with the latest Global Economic Prospects report, released on January 9, 2024, indicating that this period could see the slowest five-year GDP growth rate in 30 years.
- A previous report by the World Bank in June 2023 indicated that the global economy was precariously positioned, with significant growth slowdowns anticipated due to sharp interest-rate hikes impacting economic activities and intensifying vulnerabilities in lower-income nations.
- This slowdown was linked to several factors, including overlapping negative impacts from the COVID-19 pandemic, Russia's invasion of Ukraine, and stringent monetary policies to combat high inflation.
- While the global economic situation has improved compared to the previous year, reducing the risk of a global recession primarily due to the robust performance of the United States' economy, the medium-term outlook for many developing countries has worsened. Most major economies are experiencing decelerating growth, weak global trade, and the tightest financial conditions in decades, the report noted.
- Global trade growth in 2024 is forecasted to be half of what it was in the decade before the pandemic. Developing economies, particularly those with low credit ratings, are expected to continue facing high borrowing costs, with global interest rates at their highest levels in four decades when adjusted for inflation.
- Global growth is anticipated to decelerate for the third consecutive year, decreasing from 2.6 percent last year to 2.4 percent in 2024, which is nearly three-quarters of a percentage point below the average growth rate of the 2010s. Developing economies are projected to grow at 3.9 percent, over a percentage point less than their average growth in the previous decade.
- Low-income countries, following a disappointing performance last year, are expected to grow by 5.5 percent, lower than earlier projections. By the end of 2024, roughly one-fourth of developing nations and about 40 percent of low-income countries will remain poorer than they were before the COVID-19 pandemic in 2019. Growth in advanced economies is expected to decline to 1.2 percent this year from 1.5 percent in 2023
3. Report on India
- According to the World Bank’s latest Global Economic Prospects report, India's growth for the fiscal year 2023/24 (April 2023 to March 2024) is estimated to have risen to 8.2 percent, which is 1.9 percentage points higher than the January estimate.
- The report also indicates that global growth is expected to remain steady at 2.6 percent in 2024 and slightly increase to an average of 2.7 percent in 2025-26, which is significantly lower than the pre-COVID-19 average of 3.1 percent.
- "India is projected to continue as the fastest-growing among the world's largest economies, though its growth rate is expected to slow. Following a robust performance in FY2023/24, an average growth rate of 6.7 percent per year is anticipated for the three fiscal years starting in FY2024/25," the report states. This slowdown is primarily attributed to a decrease in investment from a high baseline
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What is the World Bank?
The World Bank is an international financial institution that provides financial and technical assistance to developing countries around the world. Its primary goal is to reduce poverty and support development by providing loans, grants, and expertise for projects that can improve infrastructure, education, health, and other critical areas. Here are some key points about the World Bank:
The main mission of the World Bank is to reduce poverty and improve living standards by promoting sustainable development. This includes funding projects that can lead to economic development, such as building infrastructure, improving education systems, and supporting agricultural development
The World Bank provides loans and grants to the governments of poorer countries to help them carry out development projects. These projects can range from building schools and hospitals to providing clean drinking water and improving roads and transportation systems
The World Bank is also a leading source of research and data on global development. It publishes numerous reports and datasets on economic trends, poverty, and development challenges, which are used by policymakers, researchers, and the public
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4. What are the major reports published by the World Bank?
The World Bank publishes several major reports that provide in-depth analysis and data on various aspects of global economic development, poverty reduction, and financial stability.
Some of the most notable reports include:
World Development Report (WDR)
Global Economic Prospects (GEP)
Ease of Doing Business Report
Poverty and Shared Prosperity Report
Global Financial Development Report
International Debt Statistics
Global Monitoring Report (GMR)
World Bank Atlas
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For Prelims: Indian Economy, International reports, World Bank
For Mains: GS-III: Indian Economy
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Previous Year Questions
1.‘Global Financial Stability Report’ is prepared by the (UPSC CSE 2016) (a) European Central Bank (b) International Monetary Fund (c) International Bank for Reconstruction and Development (d) Organization for Economic Cooperation and Development Answer (b) The 'Global Financial Stability Report' is prepared by the International Monetary Fund (IMF). This report provides comprehensive assessments of global financial markets, identifies potential vulnerabilities, and offers policy recommendations to foster financial stability. It is published twice a year, typically in April and October |
Source: Indianexpress
