Daily Current Affairs : 16-January-2024
The recently released Global Economic Prospects Report by the World Bank paints a nuanced picture of the global economy, suggesting a challenging road ahead. In this essay, we will delve into the key highlights of the report, explore the World Bank’s recommendations for global action, and provide a brief overview of the institution itself.
Global Economic Outlook 2024: Key Highlights:
Sluggish Growth Projection: The report projects the slowest half-decade of GDP growth in thirty years, with a forecasted rate of 2.4% in 2024. Despite reduced risks of a global recession, geopolitical tensions pose fresh near-term hazards.
US Economic Strength: The strength of the US economy is a positive factor, contributing to a more favorable global economic position compared to the previous year, lowering the risk of a recession.
Challenges for Developing Economies: Developing economies face a complex scenario with slowing growth, sluggish global trade, and tight financial conditions. Global trade growth in 2024 is expected to be only half the average of the decade preceding the pandemic.
Borrowing Costs and Debt Concerns: Borrowing costs, especially for developing economies with low credit ratings, are expected to remain high. Global growth is projected to decelerate for the third consecutive year, dropping to 2.4% in 2024.
Developing Economies’ Growth Dilemma: Developing economies are projected to grow at 3.9%, over one percentage point below the previous decade’s average. Low-income countries face challenges, growing at 5.5%, lower than initial expectations.
Implications on Global Priorities: Weak near-term growth, particularly in developing countries, may result in high levels of debt and limited access to food, obstructing progress on global priorities.
Recommendations for Global Action:
Accelerating Investment: Urgent action is required to accelerate investment, emphasizing the need to strengthen fiscal policy frameworks in the current decade.
Addressing Climate Change and Global Goals: The report calls for a ‘formidable’ increase in investment by developing countries, targeting approximately USD 2.4 trillion per year. This investment is crucial to address climate change and achieve key global development goals by 2030.
Comprehensive Policy Packages: Developing economies are urged to implement comprehensive policy packages, encompassing improvements to fiscal and monetary frameworks. Recommendations include the expansion of cross-border trade and financial flows, enhancements to the investment climate, and the strengthening of institutional quality.
World Bank: A Brief Overview:
Foundation and Evolution: Established in 1944 as the International Bank for Reconstruction and Development (IBRD), later evolving into the World Bank. A global partnership of five institutions addressing sustainable solutions for poverty reduction and shared prosperity.
Membership and Representation: The World Bank has 189 member countries, including India, playing a crucial role in international development.
Key Reports: Major reports published by the World Bank include the Human Capital Index and the World Development Report.
Development Institutions: The World Bank Group comprises five development institutions: IBRD, IDA, IFC, MIGA, and ICSID (International Centre for the Settlement of Investment Disputes), from which India is excluded as a member.
Important Points:
- Slowest half-decade of GDP growth in 30 years (2.4% forecasted in 2024).
- Geopolitical tensions pose near-term hazards despite reduced recession risks.
- US economic strength contributes to a more favorable global position, lowering recession risk.
- Developing economies face challenges like slowing growth, sluggish global trade, and tight financial conditions.
- Global trade growth in 2024 expected to be only half the average of the decade preceding the pandemic.
- Borrowing costs remain high, particularly for developing economies with low credit ratings.
- Global growth projected to decelerate for the third consecutive year, dropping to 2.4% in 2024.
- Developing economies projected to grow at 3.9%, over one percentage point below the previous decade’s average.
- Low-income countries face growth challenges, growing at 5.5%, lower than initial expectations.
- Weak near-term growth, especially in developing countries, may lead to high debt levels and limited access to food.
Recommendations for Global Action:
- Urgent action needed to accelerate investment, emphasizing strengthened fiscal policy frameworks.
- Developing countries urged to make a ‘formidable’ increase in investment (USD 2.4 trillion per year) to address climate change and achieve global development goals by 2030.
- Implement comprehensive policy packages in developing economies, including fiscal and monetary framework improvements.
- Recommendations include expanding cross-border trade and financial flows, enhancing the investment climate, and strengthening institutional quality.
World Bank: A Brief Overview:
- Established in 1944 as the International Bank for Reconstruction and Development (IBRD), evolving into the World Bank.
- A global partnership of five institutions addressing sustainable solutions for poverty reduction and shared prosperity.
- 189 member countries, including India, playing a crucial role in international development.
- Major reports published include the Human Capital Index and World Development Report.
- The World Bank Group comprises five development institutions: IBRD, IDA, IFC, MIGA, and ICSID (India excluded).
Why In News
Recently, the World Bank (WB) released its Global Economic Prospects Report, revealing that the global economy may witness a poor performance by the end of 2024, marking the slowest half-decade of GDP (Gross Domestic Product) growth in 30 years. Despite these challenges, the report highlights potential opportunities for recovery through strategic policy interventions and international collaboration.
MCQs about Global Economic Challenges
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What does the World Bank’s Global Economic Prospects Report project for the global economy in 2024?
A. Rapid growth
B. Slowest half-decade of GDP growth in 30 years
C. Global recession
D. Stable economic conditions
-
What contributes to a more favorable global economic position, reducing the risk of a recession, according to the report?
A. Geopolitical tensions
B. Sluggish global trade
C. US economic strength
D. Tight financial conditions
-
What is the recommended action to address challenges in developing economies, as per the World Bank’s report?
A. Lowering fiscal spending
B. Accelerating investment
C. Restricting cross-border trade
D. Increasing borrowing costs
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Which of the following is NOT a part of the World Bank Group’s development institutions?
A. IBRD
B. IDA
C. IFC
D. WTO
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