Publication: Global Economic Prospects, January 2024
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Published
2024-01-09
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1014-8906
Date
2023-12-08
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Note: Chart 1.2.B has been updated on January 18, 2024. Chart 2.2.3 B has been updated on January 14, 2024. Global growth is expected to slow further this year, reflecting the lagged and ongoing effects of tight monetary policy to rein in inflation, restrictive credit conditions, and anemic global trade and investment. Downside risks include an escalation of the recent conflict in the Middle East, financial stress, persistent inflation, weaker-than-expected activity in China, trade fragmentation, and climate-related disasters. Against this backdrop, policy makers face enormous challenges. In emerging market and developing economies (EMDEs), commodity exporters face the enduring challenges posed by fiscal policy procyclicality and volatility, which highlight the need for robust fiscal frameworks. Across EMDEs, previous episodes of investment growth acceleration underscore the critical importance of macroeconomic and structural policies and an enabling institutional environment in bolstering investment and long-term growth. At the global level, cooperation needs to be strengthened to provide debt relief, facilitate trade integration, tackle climate change, and alleviate food insecurity.
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“World Bank. 2024. Global Economic Prospects, January 2024. © World Bank. http://hdl.handle.net/10986/40715 License: CC BY 3.0 IGO.”
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The majorities of developing countries has, or are close to having regained full-capacity activity levels. As a result, country-specific productivity and sartorial factors are now the dominant factors underpinning growth. Macroeconomic policy in developing countries needs to turn toward medium-term productivity enhancements, managing inflationary pressures re-establishing the fiscal and monetary cushions that allowed most developing countries to come through the crisis so well. In contrast, activity in high income and some developing European countries continues to struggle with crisis-related problems, including banking-sector, fiscal and household restructuring. The remainder of this report is organized as follows. The next section discusses recent developments in global production, trade, inflation, and financial markets, and presents updates of the World Bank's forecast for the global economy and developing countries. This is followed by a more detailed discussion of some of the risks and tensions in the current environment, and a short section of concluding remarks. Several annexes address regional and sartorial issues in much greater detail.
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In 2026, commodity prices are forecast to fall by a further 7 percent, a fourth consecutive year of decline, as global growth remains sluggish and the oil market oversupplied. Energy price movements are envisaged to continue contributing to global disinflation in 2026. Metals and minerals prices are expected to remain stable in 2026, while agricultural prices are projected to edge down, primarily due to strong supply conditions. Precious metals prices are expected to rise another 5 percent, after a historically large, investment-driven rally of about 40 percent in 2025. Risks to the commodity price projections are tilted to the downside. Key downside risks include weaker-than-expected global growth, a longer-than-assumed period of economic policy uncertainty, and additional oversupply of oil. 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