World Bank predicts decline in global economic growth

Global economic growth is anticipated to experience a decline in 2025, with the World Bank warning that this downturn is influenced by rising trade barriers and increasing policy uncertainty. According to the latest Global Economic Prospects report, growth is expected to weaken to 2.3 percent, nearly half a percentage point lower than earlier predictions made at the start of the year.

The World Bank’s report highlights that this global outlook assumes the maintenance of tariff rates that were in effect at the end of May. These tariffs are expected to remain steady, with pauses in previously announced tariff hikes between the United States and its trading partners continuing. While a global recession isn’t anticipated at this juncture, the report indicates that the average global growth rate is poised to be the slowest in any decade since the 1960s.

A significant implication of this decline in economic growth is that nearly 70 percent of all economies are seeing their growth forecasts slashed, with developing countries bearing the brunt of these changes. In fact, for many developing nations, about 60 percent of them will average a growth rate of only 3.8 percent in 2025, with projections slightly increasing to 3.9 percent in the succeeding two years. This is more than a full percentage point lower than the average growth rates during the prosperous 2010s.

The ramifications of this decline are particularly severe for developing nations that rely heavily on steady economic growth for initiatives such as job creation, poverty alleviation, and narrowing income disparities with wealthier nations. The World Bank cautions that without immediate course correction, the declining trend could severely impact living standards across the globe. They emphasize the urgency for nations to rebuild trade relations, stating that “economic cooperation is better than any of the alternatives” to navigate current challenges.

Furthermore, the report stresses the necessity for governments to enhance business climates, which involves fostering environments that promote employment opportunities and ensuring that the workforce is adequately equipped with necessary skills. The need for a skilled labor force is pivotal in adapting to the evolving economic landscape as the world grapples with decreased growth rates.

In a related and alarming development, the World Food Programme (WFP) has declared that, for the first time, it lacks prepositioned food supplies in Haiti in anticipation of the hurricane season, which runs from June to November. WFP has highlighted the dire reality that their staff currently do not possess the financial resources to respond promptly to emergency situations in Haiti amid the worsening crisis.

While other United Nations agencies have prepositioned essential supplies, including water and sanitation kits for around 100,000 people and health supplies for 20,000, the existing provisions are insufficient, particularly given the critical absence of food supplies in facing potential emergencies. Deputy spokesperson Farhan Haq warned that the “current lack of contingency stocks and operational funds leaves Haiti’s most at-risk communities dangerously unprotected” during a period of heightened vulnerability.

The humanitarian situation in Haiti is further exacerbated by rampant food insecurity and malnutrition, with over half the population currently facing acute hunger. Tragically, Haiti is among five countries worldwide experiencing famine-like conditions. The ongoing armed violence led by gangs, which has displaced over one million people, has significantly compounded the hunger crisis and hindered access to fundamental services, including clean water and healthcare.

UN agencies have estimated that they will require a staggering $908 million to sustain their delivery of life-saving resources in Haiti. However, they have received only a mere $78 million in emergency funding so far, demonstrating a significant gap in addressing urgent needs. The implications of both the global economic slowdown and the humanitarian crisis in Haiti highlight a critical juncture for international cooperation and solidarity.

In conclusion, the projected decline in global economic growth signifies a potential setback in global recovery efforts. As developing nations struggle to maintain momentum, addressing the interconnected challenges of economic growth, trade relations, and humanitarian crises will be paramount. Collective efforts are essential—not only to bolster economic conditions but to support vulnerable communities, particularly in regions like Haiti, wherein the dire socio-economic conditions demand urgent attention. Moving forward, collaboration among nations, organizations, and stakeholders will be crucial in shepherding the world toward recovery and resilience in the face of impending economic challenges.

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