The World Bank released on June 11, 2024 its “Global Economic Prospects – June 2024” report in which it estimated world economic growth to have dropped from around 3.0% in 2022 to 2.6% in 2023, projecting growth to attain 2.6% in 2024 and 2.7% in each of 2025 and 2026. The world economic growth forecast for the year 2024 shows a stable growth figure for the first time in three years despite the widening geopolitical tensions and elevated interest rates. The World Bank revealed that the expected positive world economic growth for 2025-2026 came amid moderate growth in trade and investment. In addition, the report mentioned that global inflation is expected to average 3.5% in 2024. The World Bank noted in this respect that, given inflationary pressures, central banks in Advanced Economies and in Emerging Markets & Developing Economies (EMDEs) would probably remain vigilant in easing monetary policy. Accordingly, the report indicated that the average benchmark policy interest rates for the coming years are expected to be around double the 2000-2019 average.

The report revealed that growth in advanced economies dropped from circa 2.6% in 2022 to 1.5% in 2023, projecting said figure to remain flat in 2024 before increasing to 1.7% in 2025 and to 1.8% in 2026. Concerning EMDEs, the World Bank projected growth to drop slightly from 4.2% in 2023 to 4.0% in each of 2024 and 2025 before somewhat decreasing to 3.9% in 2026. According to the report, the slowing economic activity in China is projected to be countered by the rising economic growth in other EMDEs due to higher domestic demand and a recovery in trade. The World Bank noted, however, that the total EMDE output is expected to remain below pre-pandemic levels thereby displaying the long-term damages inflicted by the crises in the region over the last four years.

On the regional front, the World Bank estimated economic growth in the Middle East & North Africa (MENA) region to improve from 1.5% in 2023 to 2.8% in 2024 and 4.2% in 2025 before dropping to 3.6% in 2026. The report noted that the geopolitical tensions and policy uncertainty are high in the MENA region. In details, the World Bank revealed that human suffering and damages that hit the infrastructure and agricultural land resulting from the war in Gaza are devastating, leading to a regional outbreak of the war involving Iran, Lebanon and Syria. In addition, the attacks on shipping in the Red Sea by Houthi rebels in Yemen have decreased transit through the Suez Canal, disrupted trade and increased policy uncertainty especially in neighboring countries. The report revealed that the growth estimates for 2024 and 2025 mostly echo the gradual increase in oil production since the fourth quarter of 2023. The report noted, however, that economic growth projection for the year 2024 is 0.7 percentage-points below the January 2024 forecast reflecting the oil production cuts and the continued conflicts in the region. Delving further into details, the report mentioned that growth in oil-exporting MENA countries is expected to improve from 1.3% in 2023 to 2.8% in 2024 and 4.2% in 2025. As per the World Bank, The extensions of oil production cuts are expected to reduce output growth in 2024. In addition, the anticipated phase-out of more cuts starting at a later stage in the year should assist in lifting growth in 2025. As for oil-importing MENA countries, the report mentioned that growth has also improved from 2.7% in 2023 to 2.9% in 2024 and 4.0% in 2025. The World Bank noted that the 2024 estimate is 0.3 percentage-points lower than the January 2024 projection, attributing said downward revision to the reassessment of the effects on the conflicts in the region, especially on tourism. From another perspective, the report revealed that risks pertaining to the MENA region involve the possible acceleration of armed conflicts with oil importers and countries near the conflicts potentially becoming the most negatively affected. In addition, the World Bank stated that the MENA region is also at risk from rising violence and social tensions, tightening global financial conditions and more frequently occurring natural disasters.

On a local basis, the World Bank estimated Lebanon’s real GDP to have contracted by 0.6% in 2022 and 0.2% in 2023, projecting a growth of 0.5% in 2024. The report noted that forecasts beyond the year 2024 for Lebanon were removed due to a high degree of uncertainty. According to the World Bank, the outlook for Lebanon is ambiguous given the sizeable security, political, and financial challenges the country is facing. The report noted that inflation is expected to be high while investment will be tamed. The report also expects a recovery in tourism despite the high uncertainty levels, especially since tourism is subject to external and domestic shocks. Finally, the real growth figures for Lebanon for the year 2023 were revisited from those published in the January 2024 issue of the Global Economic Prospects report at a time when the World Bank had estimated an economic growth of 0.2% for 2023 before the onset of the war on Gaza in the last quarter of the year.