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World Bank boosts forecast: Strength of US economy will support global growth of 2.6% this year

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Workers walk among shipping containers in a loading area at a BNSF intermodal terminal, Jan. 3, 2024, in Edgerton, Kan. The World Bank upgraded the outlook for the global economy in 2024, citing continued resilience and strength in the United States. (AP Photo/Charlie Riedel, File)

WASHINGTON (AP) — The World Bank upgraded its outlook for the global economy Tuesday, estimating that it will expand 2.6% this year on the strength of sustained growth in the United States.

The bank's latest outlook marks an increase from the 2.4% growth for 2024 it had predicted in January. And it would match the global economy's 2.6% expansion in 2023.

But the agency cautioned that global growth remains sluggish by past standards, that the poorest countries are struggling under the weight of heavy debts and high interest rates and that increased trade barriers endanger prosperity worldwide. The brutal wars in Ukraine and Gaza are inflicting further pressures on regional economies.

Stronger-than-expected growth in the United States — the world’s biggest economy — accounted for 80% of the World Bank's upgraded outlook. The agency now expects the U.S. economy to expand 2.5% in 2024, the same as in 2023 but up sharply from the 1.6% the bank had predicted in January.

“U.S. growth is exceptional,’’ Ayhan Kose, the bank’s deputy chief economist, told The Associated Press ahead of the release of its latest Global Economic Prospects report.

The World Bank, made up of 189 member nations, seeks to reduce poverty and boost living standards by providing grants and low-rate loans to developing economies.

From January through March, the U.S. economy expanded at just a 1.3% annual rate, the slowest pace in nearly two years, and Kose said the World Bank forecast took the first-quarter slowdown into account. The pullback was due largely to factors that economists view as temporary: A surge in imports and a reduction in business inventories. By contrast, the core components of economic growth — consumer spending and business investment — remained solid in the first three months of the year.

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