Global Economic Prospects

Setting the Stage to Accelerate Growth

Workers loading onion sacks

The global economy is growing too slowly for lasting development. Even as the global economy stabilizes, emerging market and developing economies (EMDEs) are projected to have the weakest long-term growth outlook since the start of this century. Most low-income (LICs) countries are not on course to graduate to middle-income status by 2050. This topic page brings together the main policy messages from recent World Bank research on how policy makers can boost investment and growth. It primarily draws on the World Bank Global Economic Prospects reports. In addition to macroeconomic projections, these reports offer analysis and policy advice for countries to create favorable external environments, ensure macroeconomic stability, reduce structural constrains, tackle climate change, and boost long-term growth and development.

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 strengthening trade relationships, supporting green and digital transitions, delivering debt relief, and improving climate adaptation.

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Key Policy Messages

These are major themes and messages from the Global Economic Prospects reports and related macroeconomic research by the World Bank. Click on each card to learn more and access related publications. 

Countries need to prioritize reforms to accelerate investment and deepen trade ties

Trading boat

Countries need to prioritize reforms to accelerate investment and deepen trade ties

Emerging market and developing economies can accelerate growth by adopting reforms to attract investment and deepen trade ties with other developing economies. To achieve this, countries must:

Public investment and sound fiscal policy are powerful ways to accelerate private investment and promote economic growth

Man working on a tablet

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

Fruit stall

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

Construction workers working on beams

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

Female farmer with corn crops

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

Commercial court

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.

Multimedia

Global Growth Is Stabilizing but at a Weak Level

Deputy Chief Economist of the World Bank Group, Ayhan Kose, discusses the main projects of the June 2024 edition of Global Economic Prospects. The report finds that 80% of the world's population will experience slower growth in the coming years than in the decade before COVID-19. Growth is projected to hold steady at 2.6% in 2024 before edging up to an average of 2.7% in 2025-26. Overall, developing economies are projected to grow 4% on average over 2024-25, slightly slower than in 2023. 

Global Economy Set for Weakest Half-Decade Performance in 30 Years

As the world nears the midpoint of what should have been a transformative decade for development, the global economy is set for the weakest half-decade performance in 30 years, according to the January 2024 edition of the World Bank’s Global Economic Prospects report. By one measure, the global economy is in a better place than it was a year ago, but mounting geopolitical tensions could create fresh near-term hazards for the world economy.  

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