Jamaica growth to continue as global economies face worst half-decade in 30 years — World Bank
JAMAICA’S economy is set to expand for a fourth year in a row this year, though at a slower pace from previous years, the World Bank Group said in its latest projections for 2024.
In forecasts published on Tuesday, the multilateral organisation said gross domestic product (GDP) in Jamaica was set to expand at 2 per cent in 2024 — down from 2.3 per cent last year. If the predictions are accurate, it would mark the second year in a row where growth would prove weaker than the previous 12 months. In 2025, the forecast is for the growth momentum to continue, though at yet a slower 1.4 per cent pace. If realised, that would mark 5 straight years of expansion coming out of the pandemic-induced decline in 2020, even though the pace of growth has been declining every year.
On the brighter side, the projection for 2024 is 0.3 per cent higher than it was in the World Bank’s June 2023 report. In addition to that, the 2.3 per cent growth estimated for 2023 is also up 0.3 per cent from what the World Bank forecast in June as well.
In the broader Caribbean, excluding Guyana, which is experiencing a resource boom, economies are expected to grow by 4.1 per cent in 2024 and 3.9 per cent in 2025, partly due to the ongoing expansion of the tourism sector. For Central America, steady growth is envisioned, with rates of 3.7 per cent in 2024 and 3.8 per cent in 2025. This outlook is supported by a moderate increase in remittances, particularly in 2024.
The forecast comes amidst a general warning from the World Bank that the global economy is on track for its worst half-decade of growth in 30 years, due to multiple challenges including higher borrowing costs, geopolitical tensions and weak global trade and investment.
“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” said Indermit Gill, the World Bank Group’s chief economist and senior vice president.
The full forecast is for global growth to slow for the third year in a row—from 2.6 per cent last year to 2.4 per cent in 2024, almost three-quarters of a percentage point below the average of the 2010s, the World Bank said. The forecast raises eyebrows and point to a difficult second half of a decade marked at the start by the onset of the coronavirus pandemic, a war in eastern Europe following Russia’s invasion of Ukraine and decades high inflation which triggered central banks across the globe to engage in the fastest rise in interest rates in several years. The Israel-Hamas war is also causing worries especially if it should escalate into a broader regional conflict in the Middle East. And World Bank officials express worry that deeply indebted poor countries cannot afford to make necessary investments to fight climate change and poverty.
“Near-term growth will remain weak, leaving many developing countries — especially the poorest — stuck in a trap, with paralysing levels of debt and tenuous access to food for nearly one out of every three people. That would obstruct progress on many global priorities. Opportunities still exist to turn the tide,” Gill continued as he pointed out that the way forward is for governments to act now in order to accelerate investment and strengthen fiscal policy frameworks.
Developing economies are projected to grow just 3.9 per cent, more than one percentage point below the average of the previous decade. By the end of 2024, people in about one out of every four developing countries and about 40 per cent of low-income countries will still be poorer than they were on the eve of the COVID pandemic in 2019. In advanced economies, meanwhile, growth is set to slow to 1.2 per cent this year from 1.5 per cent in 2023.
The World Bank added that the data it is analysing show that the world was failing in its goal of making the 2020s a “transformative decade” in tackling extreme poverty, major communicable diseases and climate change. However, it added that there was an opportunity to turn the tide if governments act quickly to increase investment and strengthen fiscal policy frameworks. Despite the outlook, the bank now says the global economy grew half a percentage point faster in 2023 than it had predicted back in June and concludes that “the risk of a global recession has receded.”
But it calls for “investment booms” which its deputy chief economist Ayhan Kose said in the report “have the potential to transform developing economies and help them speed up the energy transition and achieve a wide variety of development objectives.”
“To spark such booms, developing economies need to implement comprehensive policy packages to improve fiscal and monetary frameworks, expand cross-border trade and financial flows, improve the investment climate, and strengthen the quality of institutions,” he said.
“That is hard work, but many developing economies have been able to do it before. Doing it again will help mitigate the projected slowdown in potential growth in the rest of this decade.”
The world’s largest economy, the United States, is likely to have recorded 2.5 per cent growth last year — 1.4 percentage points faster than the World Bank had expected in mid-year. The World Bank, a 189-country anti-poverty agency, expects US growth to decelerate to 1.6 per cent this year as higher interest rates weaken borrowing and spending.
China’s economy, the world’s second-largest after the United States, is expected to grow 4.5 per cent this year and 4.3 per cent in 2025, down sharply from 5.2 per cent last year. China’s economy, for decades a leading engine of global growth, has sputtered in recent years. Its overbuilt property market has imploded. Its consumers are downcast, with youth unemployment rampant. And its population is aging, sapping its capacity for growth.
Slumping growth in China is likely to hurt developing countries that supply the Chinese market with commodities, like coal-producing South Africa and copper-exporting Chile.
The World Bank expects the 20 countries that share the euro currency to eke out 0.7 per cent growth this year, a modest improvement on 0.4 per cent expansion last year. Japan’s economy is forecast to grow just 0.9 per cent, half the pace of its 2023 expansion.