After years of challenges like the pandemic, conflict, inflation, and monetary tightening, economic growth seems to have stabilized. However, GDP levels are still below those seen before 2020, particularly in the world’s poorest economies. According to a report by the World Bank (WB), three main factors are putting pressure on global GDP: high interest rates, military conflicts, and political fluctuations. Despite a forecasted growth of 2.6% for the global economy this year, the WB warns that growth remains uneven and has not yet fully recovered to pre-pandemic levels.
The three main risks identified by the World Bank are high interest rates, geopolitical tensions stemming from conflicts like the Russia-Ukraine and Israel-Hamas wars, and political upheaval due to upcoming elections in major economies. The report notes that a long-term environment of high interest rates could slow growth in developing countries significantly. Geopolitical tensions have the potential to hinder global growth by driving up oil prices and transportation costs. Recent conflicts have already impacted fuel prices, with Brent crude oil currently around $82 a barrel. The report also highlights the impact of political changes on foreign and economic policies, particularly amid ongoing trade tensions between major economies like the US and China.
To mitigate these effects on global trade and economic activity, it is crucial to monitor these factors closely. The WB emphasizes that escalating conflicts, trade tensions, and political uncertainties could further dampen business and consumer confidence, ultimately putting pressure on global growth. In conclusion, despite some progress in stabilizing economic growth after years of challenges