World Bank Raises Global GDP Outlook for 2024, Further Cuts Thailand’s Growth

The World Bank has adjusted its 2024 global growth forecast slightly upwards, influenced by the robust performance of the U.S. economy. Despite this positive development, the World Bank cautioned that global output would not return to pre-pandemic levels until 2026.

According to the World Bank’s latest Global Economic Prospects report, it anticipates global economic growth to stabilize at 2.6% in 2024, the same as 2023. This adjustment represents a 0.2 percentage point increase from the January forecast, primarily driven by robust U.S. demand.

World Bank Deputy Chief Economist Ayhan Kose described the current economic situation as a “soft landing” due to the impact of higher interest rates on curbing inflation without significant job losses or disruptions in major economies. However, he also noted concerns about slower growth rates in the foreseeable future.

The report forecasts global growth rates of 2.7% for both 2025 and 2026, below the pre-COVID-19 decade average of 3.1%. The World Bank also projects that interest rates will remain double their 2000-2019 average, potentially impeding growth and increasing debt pressure on emerging market nations.

Countries representing 80% of the world’s population and GDP output are expected to witness subdued growth until 2026, with particular challenges facing the poorest economies, including mounting debt obligations, trade limitations, and climate-related adversities. International assistance is deemed necessary to aid these nations in addressing their economic needs.

Notably, the World Bank has upgraded its GDP growth forecasts for key economies – China is now expected to achieve 4.8% growth in 2024 (up from 4.5% in January), driven by increased exports offsetting domestic demand weaknesses. In India, the growth projection for 2024 has been revised upward to 6.6% from 6.4% in January, reflecting strong domestic demand.

Conversely, Japan’s 2024 growth forecast has been revised downward to 0.7% from 0.9% due to sluggish consumption growth and declining exports, while the eurozone’s 2024 GDP growth projection remains unchanged at 0.7% amid challenges related to high energy costs and weakened industrial output.

The World Bank revised down Thailand’s GDP to 2.4% in 2024 and 2.8% in 2025, down from a 3.2% growth for 2024 and 3.1% for 2025 in the previous forecast made in January this year.

The report noted that Monetary policy is expected to ease this year and next in most economies, with declining real borrowing costs set to provide some modest support to domestic demand. However, interest rate cuts are anticipated to be small due to central bank concerns about a resurgence in inflation. Still-tight monetary policies in major advanced economies will also reduce central banks’ room to maneuver. With interest rates in some EAP economies, notably China and Thailand, already below those in the United States, further interest rate cuts could also reduce net capital inflows and put downward pressure on exchange rates.