Global Economic Prospects
Setting the Stage to Accelerate Growth
After three years of slowing growth, projections at last show that the global economy may be approaching a “soft landing.” However, growth is stabilizing at a rate insufficient for progress on key development goals. This topic page brings together the main policy messages from recent World Bank research on how policy makers can boost investment and long-term growth prospects at the national level. It primarily draws on the January 2024 and June 2024 World Bank Global Economic Prospects reports. In addition to macroeconomic projections, these reports offer a range of analysis and policy advice for countries that seek to regain the momentum of the pre-pandemic years, when many countries encouraged the flow of goods, capital, and ideas across borders, and adopted policies that fostered productivity, entrepreneurship, and innovation.
Although individual policy interventions play a role in improving the prospects for increased investment and growth, the research shows that what really makes a difference is a carefully sequenced, country-specific set of macroeconomic and structural policies. Meanwhile, at the global level, policies should focus on safeguarding trade, supporting green and digital transitions, delivering debt relief, and improving food security. Stronger international cooperation on global policies can also help small states (those with a population of around 1.5 million or smaller), as they tend to be at higher risk for debt distress than other countries, and face climate-related natural disasters at a frequency eight times the average of other developing economies.
Download Report Executive SummaryKey Policy Messages
These are major themes and messages from the 2024 Global Economic Prospects reports and related macroeconomic research by the World Bank. Click on each card to learn more and access related publications.
Public investment and sound fiscal policy are powerful ways to accelerate private investment and promote economic growth
Public investment and sound fiscal policy are powerful ways to accelerate private investment and promote economic growth
Since the global financial crisis in 2009, public investment growth in developing economies has halved. Scaling up public investment by 1% of GDP can increase the level of output by up to 1.6% over the medium term, provided countries have ample fiscal space and efficient public spending practices. To enhance economic prospects, countries should additionally:
- Cut deficits—global cooperation on debt relief is also needed.
- Enhance revenue mobilization by reforming tax administrations and enlarging tax bases.
- Adopt expenditure measures, such as reprioritizing spending and eliminating costly and inefficient subsidies.
Governments can use monetary policy to help stabilize prices and make it more attractive to invest
Governments can use monetary policy to help stabilize prices and make it more attractive to invest
Persistent inflation risks underscore the need for monetary policies to remain focused on price stability. Sound monetary policy can help create an environment in which investment is more likely to surge. Countries should:
- Communicate a steadfast commitment to price stability.
- Ensure central bank independence.
- Enhance financial supervision and strengthen macroprudential policies to mitigate financial stability risks.
Structural reforms can help lay the foundation for increased investment and growth
Structural reforms can help lay the foundation for increased investment and growth
Creating the conditions for a sustained expansion in investment and lasting improvements in longer-term growth hinges on success in implementing well-designed and comprehensive policy packages to foster stability, enhance resilience, and capitalize on their potential. Investment accelerations are often preceded or accompanied by structural reforms, such as:
- Reforms to promote trade, such as lowering tariffs.
- Easing restrictions on capital flows, while mitigating risks.
- Market-oriented reforms, e.g., reduced barriers to firm entry.
- Investing in assets such as infrastructure and human capital.
- Introducing carbon pricing and reducing fossil fuel subsidies.
Investment accelerations can help countries close development gaps and support inclusive growth
Investment accelerations can help countries close development gaps and support inclusive growth
Investment accelerations have tended to coincide with better development outcomes, including faster poverty reduction, lower inequality, and improved access to infrastructure. To make growth more inclusive, including by reducing food insecurity and gender gaps, governments should:
- Enhance financial support, broaden access to finance, and boost technical knowledge for farmers.
- Encourage investment in green technology/production.
- Invest in areas like childcare, safe transport, and job re-entry programs, and address restrictive social norms, to encourage female labor force participation.
Strong institutions are key to attracting investment
Strong institutions are key to attracting investment
In countries with better institutions (such as well-functioning and impartial legal systems) the likelihood of initiating an investment acceleration is higher than in those with weaker institutions. Policymakers can strengthen institutions by:
- Defining and protecting property rights.
- Increasing the independence of the judiciary and strengthening the rule of law.
- Bolstering contract enforcement.
- Improving and unifying regulatory and institutional structures.
- Increasing transparency.
Small states and commodity-exporting countries face particular development challenges
Small states and commodity-exporting countries face particular development challenges
Comprehensive reforms can alleviate the daunting challenges faced by the world’s small states—those with a population of around 1.5 million or less. Policy priorities to consider include strengthening fiscal frameworks and the tax base and improving spending efficiency. Targeted and coordinated global policies can also help these countries stay on a sustainable fiscal path.
In commodity-exporting countries, swings in commodity prices create a major challenge for policy makers. Countries can introduce measures to smooth spending and fiscal volatility across the business cycle, such as fiscal rules, sovereign wealth funds, and fiscal institutions that can help build buffers during commodity price booms.
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Publications
Global Economic Prospects, June 2024
This latest edition of the semi-annual Global Economic Prospects report projects that growth will hold steady at 2.6 percent this year. The report also includes a special analytical focus on two topical issues – harnessing the benefits of public investment, and strengthening resilience in small states, which face intense fiscal challenges.
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The Great Reversal: Prospects, Risks, and Policies in International Development Association Countries
Despite their high potential to advance global prosperity, half of the world’s 75 most vulnerable countries are facing a widening income gap with the wealthiest economies for the first time in this century, a new World Bank report has found.
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Governance in Sub-Saharan Africa in the 21st Century: Four Trends and an Uncertain Outlook
The first decade of the millennium saw promising growth and poverty reduction in much of the continent. Yet, Sub-Saharan Africa has also been the stage of a stream of governance reform failures and policy reversals, and many countries continue to suffer from the consequences of poor governance. This paper explores the dynamics of governance reform on the continent over the past two decades and points to four key trends.
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Falling Long-Term Growth Prospects: Trends, Expectations, and Policies
The report offers the first comprehensive assessment of long-term potential output growth rates in the aftermath of the COVID-19 pandemic and the Russian invasion of Ukraine. These rates can be thought of as the global economy’s "speed limit".
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Global Economic Prospects, January 2024
This edition of Global Economic Prospects projected that global growth would slow further in 2024 amid feeble international trade and investment, but argued that policy measures could make a big difference to the outlook at the country level. The January 2024 edition also contains analytical work on two special themes, including a focus on “investment accelerations” and on challenges faced by commodity-exporting countries.
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