The World Bank, WB, issued its economic growth outlook for the remainder of the year and for the following two years. The first conclusions they show show that the forecast for the increase in world GDP is maintained at 2.6%, the same as last year. The Bank raised its forecast compared to the 2.4% forecast in January. The entity, based in Washington, kept its forecast for 2025 unchanged at 2.7%.
As for Colombia, The multilateral organization also kept the growth expectation stable, in relation to the April report, with a growth of 1.3% for 2024, 3.2% for the following year and 3.1% for 2026.
For the Colombian case, the growth estimate It was consolidated compared to that of April but is lower than the January report that placed it at 1.8%. Expectations for this year focus on a recovery in private consumption and exports.
Foreign direct investment being one of the most faithful measures of economic growth, The Bank highlighted that the country’s business confidence index has been improving since November, jumping from negative territory (-0.5%) to reaching 1.4% in the last report.
On the other hand, They expressed that the government debt has suffered an expansion since the last decade although this is a trend that sets the tone throughout the continent. While in the period 2010-2019, government debt represented 40.8% of GDP, by 2023 it stood at 52.5%. The country with the most serious debt problem is Argentina, since this was greater than the country’s Gross Domestic Product in 2023 (154.5%).
In terms of inflation, The World Bank stated that Colombia is still far from meeting the goal that the Bank of the Republic has for the end of this year. With a figure of 7.16%, the entity’s expectations indicate that it should be 3% by the end of the year, with the upper margin being 4.5% and the lower margin being 1%.
Regional overview
From a regional perspective, The World Bank estimates that economic growth for Latin America is 1.8%, which although it is 0.2 percentage points in relation to the April reportremains low thanks to interest rates that still remain high and make it difficult for foreign capital to enter to encourage foreign investment, which continues a downward trend and has not yet reached the figures expected by the entity.
Brazil’s growth will moderate to 2% in 2024 and 2.2% in 2025, supported by monetary policy rate cuts and the recovery of consumption and private investment. Argentina is expected to contract 3.5% in 2024, but recover with 5% growth in 2025 as economic imbalances are addressed and inflation decreases within President Javier Milei’s economic plan.
Mexico’s projected growth shows it will slow to 2.3% in 2024 and 2.1% in 2025, limited by a restrictive monetary policy, despite the expected decline in inflation and interest rates. The arrival of Claudia Sheinbaum to power represents a question mark for the country’s growth due to the government’s bills that would increase State interference in the Mexican economy, according to analysts.
A year without apparent shocks
In relation to the world economy, the World Bank foresees stability in growth, something that has not happened for three years. The entity anticipates that growth as a percentage of GDP will remain at 2.6% for the remainder of 2024 while in 2025 the figure will rise 0.1 pps.
“Four years after the shocks caused by the pandemic, conflicts, inflation and monetary restriction, it would seem that global economic growth would be stabilizing”said Indermit Gill, chief economist and senior vice president of the World Bank.
Developing economies are expected to grow by an average of 4% over the period 2024-25, slightly less than in 2023. For their part, Growth in advanced economies will remain stable at 1.5% through 2024, before rising to 1.7% in 2025.
However, the Bank highlighted that low income countries will have greater problems while the external debt of these countries will continue to strengthenthe possibilities of commercial exchanges will condition the entry of foreign capital and climatic phenomena could affect their performance.
