A new era of protectionism is leading to slower global growth and hindering attempts to eradicate poverty, the World Bank has warned.
The Washington-based institution said 80% of the world’s population – more than 6 billion people – were living in countries where growth would be slower in the next three years than in the pre-Covid decade.
In its half-yearly global economic prospects, the World Bank said the model of international cooperation that had allowed the poorest countries to close the gap with the wealthiest had fractured.
Even though the global economy had avoided recession, it had stabilised at a lower level than in the years leading up to the start of the pandemic.
Indermit Gill, the World Bank’s chief economist, said policymakers had cause to celebrate a “soft landing” despite the steepest rise in global interest rates since the 1980s.
“But they would be wise to keep their eye on the ball: growth rates remain too slow for progress. Without stronger international cooperation and a concerted push for policies that advance shared prosperity, the world could become stuck in the slow lane.”
The bank’s forecasts show global growth holding steady at 2.6% in 2024 before edging up to an average of 2.7% in 2025-26. In the pre-Covid decade, growth averaged 3.1%.
Gill said progress towards prosperity occurred when governments put in place policies that fostered productivity, entrepreneurship and innovation – and when they did so while cooperating.
“That was the model that flourished after the fall of the Berlin Wall. By encouraging the flow of goods, capital, and ideas across borders, it ushered in an extraordinary era of global prosperity: a span of roughly 25 years when the incomes of the poorest nations, on average, were catching up with those of the wealthiest, and when the world came within striking distance of ending extreme poverty,” he said.
But Gill added its global economic prospects provided a “sobering assessment” of how the model of international cooperation had been fracturing, pointing to how trade measures designed to restrain cross-border commercial flows were growing at a historic pace.
“Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying,” Gill said.
“However, growth is at lower levels than before 2020. Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events. Developing economies will have to find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure.”
Gill said the world’s 75 poorest countries, eligible for grants or cheap loans from the bank, would not be able to make the necessary progress without international support.
