Washington: Global economic growth is expected to continue steadily over the next two years, supported by the better-than-expected performance of the US, Chinese, and European economies, limited impact of tariff fluctuations, stagnating inflation, and AI investments, the deputy chief economist of the World Bank Group and director of the World Bank's Prospects Group said.
According to Anadolu Agency, Ayhan Kose, evaluating the findings of the Global Economic Prospects Report published by the World Bank, described the upward revisions in global economic growth forecasts as "good news." Kose explained that the bank's global economic growth forecasts have been raised from 2.4% to 2.6% for this year and from 2.6% to 2.7% for next year due to the performance of the American, Chinese, and European economies, which exceeded expectations.
Kose noted that the impact of fluctuations in customs tariffs and trade uncertainties on growth was less than anticipated, stating: "International supply chains turned out to be much more resilient than expected." He also mentioned that financial conditions have improved with stagnating inflation and that increasing investments in artificial intelligence in some countries have supported growth.
Kose highlighted several risks facing the world economy, including frequent changes in international trade, particularly in customs tariffs, the potential re-emergence of financial shocks, and the significant debt problem in many countries. He emphasized the importance of countries developing a serious medium-term fiscal program to address these issues, focusing on strong revenue measures and increased expenditure efficiency.
Regarding global inflation, Kose observed a slight downward trend last year and expects this to continue. He attributed the slowdown to volatile commodity prices, declining energy costs, and softness in labor markets. However, he stressed the importance of adjusting monetary policy to respond to potential inflationary shocks.
The economist also pointed to the challenges the labor market will face in the coming decade, with 1.2 billion young people expected to enter the workforce in developing countries. Kose warned that if job creation does not accelerate, a major unemployment problem could arise. He emphasized the need to strengthen the investment environment and ensure that new workforce entrants are educated for high-value, productive jobs.
Kose concluded by discussing the implications of AI advancements, noting that while AI can create new jobs, it may also lead to job displacement in the short term. He urged governments to develop digital infrastructure and provide necessary education to ensure successful integration of new generations into the business world.