The World Bank isn’t banking on the world’s economy getting much better.
At least in the near term.
In its semiannual Global Economic Prospects report, the 189-member international financial institution warned that the 2020s are shaping up to be a “decade of wasted opportunity,” with an economy that’s decidedly worse than the decade preceding it.
In the immediate future, the World Bank projected that the growth in world output during 2024 will decline from 2.6% to 2.4% — the third consecutive year of deceleration.
“Downside risks to the outlook predominate,” wrote the World Bank, noting that “inflation remains above target in most advanced economies.”
The report also underscored that global trade growth in 2023 was the slowest outside global recessions in the past 50 years, with goods trade “contracting amid anemic global industrial production.”
“Beyond the next two years, the outlook is dark,” said Indermit S. Gill, senior vice president and chief economist at The World Bank Group.
Gill’s colleague, Ayhan Kose, the World Bank’s deputy chief economist and director of the Prospects Group, wrote that “developing economies need to … expand cross-border trade and financial flows,” among other things, adding that “investment booms” will be crucial for the world’s long-term growth.
And reading between the lines of the report, it appears that investments across the eight pillars of the ConnectedEconomy™ ecosystem could help turn the tide.
Per the World Bank, global growth was weaker in the 2020-to-date period than during the years surrounding the 2008-2009 global financial crisis, downturns in the early 2000s around the dotcom bubble, as well as the late 1990s Asian financial crisis.
The report noted that, at the very least, a resilient U.S. economy has put the global economy in a better place than was expected a year ago, but emphasized that developing countries are bearing the brunt of the world’s slowdown, with “high borrowing costs and anemic trade volumes” weighing on their economies.
Complicating matters are the various global conflicts that are pinching supply chains and redirecting trade ships, a situation that if inflamed could pose greater inflationary risks.
In the meantime, as PYMNTS has been covering, innovations within the shipping and logistics sector have been combatting uncontrollable macro events with real-time insights that can help give firms the agility to navigate the briskly blowing headwinds.
Additionally, there is no shortage of digital transformations and innovations designed to streamline cross-border transactions emerging across the marketplace.
“We’re moving beyond the days in which emails, paper and even handwritten invoices have gummed up the works, and ultimately have kept payments (and thus goods) from getting where they needed to go,” Flexport Chief Financial Officer Kenny Wagers told PYMNTS in an interview.
Most challenges come with transformative opportunities hidden inside — even those on a global scale.
And within an operating environment where the only constant is change, digital intelligence is becoming crucial.
Sayari Labs, a counterparty and supply chain risk intelligence provider, on Tuesday (Jan. 16) received a strategic growth investment of up to $228 million; while Freightos, a digital booking and payment platform for the international freight industry, reported record transactions for the fourth quarter of 2023 — both pieces of news underscoring how even the most traditional sectors underpinning the global economy are becoming more modernized, more efficient, and more capable of navigating contemporary challenges.
On Wednesday (Jan. 17), global shipping companies Maersk and Hapag-Lloyd also announced that they have signed an agreement for a long-term operational collaboration, known as the “Gemini Cooperation.”
The new collaboration will begin in February 2025 and aims to create a flexible and interconnected ocean network with industry-leading reliability of above 90%.
International conflict may bad for free trade, but global cooperation and innovation is good for economic growth.
And while the World Bank points to an economic decline, at least one area of world trade has improved — over the past decade, the volume and value of cross-border payments have increased by 61% and 37%, respectively.