World Bank: Global Growth Still Lower Than Pre-COVID

A new report from the World Bank has good news and bad news about the global economy.

The good news, according to the Global Economics Prospects 2024 report issued Tuesday (June 11), is that global growth remains steady, inflation has dropped to a three-year low and financial conditions have improved.

“Yet, more than four years after the upheavals of the COVID-19 pandemic and subsequent global shocks, it’s clear the world — and developing economies, in particular — has yet to rediscover a reliable path to prosperity,” the report said.

Global growth, the report said, is stabilizing at a rate that’s not sufficient for reaching important development goals: 2.7% per year on average through 2026, below the 3.1% rate seen in the decade before the pandemic.

“By the end of this year, one in four developing economies will be poorer than it was on the eve of the pandemic,” the World Bank said. “By 2026, countries that are home to more than 80 percent of the world’s population would still be growing more slowly, on average, than they were in the decade before COVID-19.”

The report also pointed to some bright spots, including “impressive resilience” in the U.S. economy, where growth has “remained buoyant in the teeth of the fiercest monetary policy tightening in four decades.”

American “dynamism, in fact,” the report continued, “is one reason the global economy enjoys some upside potential over the next two years.”

But not every American might agree with this sentiment. As PYMNTS wrote last week, “fewer and fewer consumers find themselves with savings enough to fall back on, and they are adjusting their spending habits accordingly.”

“The Nonessential Spending Deep Dive Edition” of PYMNTS Intelligence’s New Reality Check: The Paycheck-To-Paycheck Report monitored consumers’ financial lifestyles from year to year, and found that as of last summer, they were more financially unstable than in previous years.

The proportion of consumers undergoing financial strain from living paycheck to paycheck rose by nearly 3 percentage points year over year. By July, more than a fifth of consumers found themselves in this situation, struggling to meet their financial obligations.

“It seems that, this coming July, there may be little improvement in consumer spending,” PYMNTS wrote. “Retailers have seen consumers continue to cut back and hold off on major purchases, suggesting that shoppers are not feeling particularly financially secure.”

For example, Bruce Thorn, CEO of Big Lots, said on an earnings call last week that his company missed its sales goal due to an ongoing pullback in spending by its core customers, especially when it comes to bigger-ticket discretionary items.

“The consumer environment softened in the first quarter, as both consumer confidence and sentiment declined due to concerns about inflation, unemployment and interest rates,” he said.