The World Bank is predicting a bleak economic future for the 2020s.
A new report published Tuesday predicts the world economy will continue to underperform for the rest of the decade without some unforeseen change.
“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” Indermit Gill, the World Bank Group’s chief economist and senior vice president, said in a press release. “Near-term growth will remain weak, leaving many developing countries—especially the poorest—stuck in a trap: with paralyzing levels of debt and tenuous access to food for nearly one out of every three people. That would obstruct progress on many global priorities.”
The report illustrates the long-term consequences of the COVID-19 pandemic, the war in Ukraine, and the Israel-Hamas war, the effects of which will likely be felt for the rest of the decade. These unforeseen complications squandered what was expected to be a “transformative decade,” the report claims.
“The end of 2024 will mark the halfway point of what was expected to be a transformative decade for development—when extreme poverty was to be extinguished, when major communicable diseases were to be eradicated, and when greenhouse-gas emissions were to be cut nearly in half,” it read. “What looms instead is a wretched milestone: the weakest global growth performance of any half-decade since the 1990s, with people in one out of every four developing economies poorer than they were before the pandemic.”
“Downside risks to the outlook predominate,” it added. “The recent conflict in the Middle East, coming on top of the Russian Federation’s invasion of Ukraine, has heightened geopolitical risks. Conflict escalation could lead to surging energy prices, with broader implications for global activity and inflation. Other risks include financial stress related to elevated real interest rates, persistent inflation, weaker-than-expected growth in China, further trade fragmentation, and climate change-related disasters.”
Tight monetary policies to rein in inflation, restrictive credit conditions, and “anemic” global trade and investment show little signs of changing in the coming years.
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However, the report isn’t entirely negative. Parts of it argue that moves to boost investment and changes in monetary policy could reverse the negative trends seen throughout this decade.
“Opportunities still exist to turn the tide,” Gill said. “This report offers a clear way forward: it spells out the transformation that can be achieved if governments act now to accelerate investment and strengthen fiscal policy frameworks.”
