Global economy to expand by 2.7% in 2025, 2026: World Bank

  17 January 2025    Read: 360
Global economy to expand by 2.7% in 2025, 2026: World Bank

The World Bank forecast Thursday that the global economy will expand by 2.7% in both 2025 and 2026, the same pace as in 2024, AzVision.az reports, citing Anadolu Agency. 

However, developing economies are expected to complete the first quarter of the 21st century with the weakest long-term growth outlook since 2000, it said in its latest Global Economic Prospects report.

"Even as the global economy stabilizes in the next two years, developing economies are expected to make slower progress in catching up with the income levels of advanced economies," it noted.

The report said that growth in developing economies is also expected to hold steady at about 4% over the next two years.

"This, however, would be a weaker performance than before the (coronavirus) pandemic—and insufficient to foster the progress necessary to alleviate poverty and achieve wider development goals," it added.

During the first decade of the 21st century, developing economies grew at the fastest clip since the 1970s, the report noted.

"New global trade restrictions in 2024 were five times the 2010-19 average. As a result, overall economic growth dropped—from 5.9% in the 2000s to 5.1% in the 2010s to 3.5% in the 2020s.

"Since 2014, with the exception of China and India, the average per capita growth rates of income in developing economies have been half a percentage point lower than that in wealthy economies, widening the rich-poor gap," it said.

Indermit Gill, the chief economist and senior vice president for development economies at the bank, said in the report that the next 25 years will be tougher for developing economies then the last 25.

Developing economies account for about 45% of global GDP currently, up from 25% in 2000, and more than 40% of their goods exports go to other developing economies, double the share in 2000.

"Developing economies have also become an important source of global capital flows, remittances and development assistance to other developing economies: between 2019 and 2023, they accounted for 40% of global remittances—up from 30% in the first decade of the century," it noted.

As a result, these economies now have greater sway on growth and development outcomes in other developing economies, it said, adding that an increase of one percentage point in the GDP growth of the three largest developing economies—China, India and Brazil—tends to result in a cumulative GDP boost of nearly 2% in other developing economies after three years.

 

AzVision.az


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