The World Bank has cautioned that if COVID-19 reappears and the continuing Russian-Ukrainian conflict intensifies, the world economy may enter a recession this year.
If this occurs, it will mark the first time in more than 80 years that two worldwide recessions take place inside the same decade, according to the Bretton Woods institution’s most recent assessment on the state of the world economy, which was released yesterday in Washington, DC, America.
The World Bank also revised down its projection for Nigeria’s growth in 2023 from 3.1% to 2.9%.
The Statement added: “Given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession. This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.”
The global economy is anticipated to expand by 1.7% in 2023 and 2.7% in 2024, according to the analysis.
The agency released a critical study for sub-Saharan Africa stating that due to the region’s low per capita income, the number of people living in poverty is projected to increase this year.
It said: “Over the next two years, per-capita income growth in emerging markets and developing economies is projected to average 2.8 per cent—a full percentage point lower than the 2010-2019 average. In Sub-Saharan Africa—which accounts for about 60 per cent of the world’s extreme poor—growth in per capita income over 2023-24 is expected to average just 1.2 per cent, a rate that could cause poverty rates to rise, not fall.”
The World Bank President, David Malpass, commented on the report’s results by observing that “the crisis facing development is intensifying as the global growth outlook is deteriorating.”
“Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates. Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty, and infrastructure and the increasing demands from climate change.”
It is anticipated that growth in advanced economies will decrease from 2.5% in 2022 to 0.5% in 2023.
According to the analysis, the GDP levels in emerging and developing nations will be about 6% below what was anticipated before the epidemic by the end of 2024.
Additionally, it stated that even though worldwide inflation is predicted to reduce, it will still be higher than it was before the pandemic.
It forecasts that gross investment in the economies will likely grow by about 3.5% on average between 2022 and 2024, which is less than half the rate that prevailed over the previous two decades. This estimate is based on the medium-term outlook for investment growth in emerging markets and developing economies.
Ayhan Kose, the director of the World Bank’s Prospects Group, stated in his own words: “Subdued investment is a serious concern because it is associated with weak productivity and trade and dampens overall economic prospects. Without strong and sustained investment growth, it is simply impossible to make meaningful progress in achieving broader development and climate-related goals.”
“National policies to boost investment growth need to be tailored to country circumstances but they always start with establishing sound fiscal and monetary policy frameworks and undertaking comprehensive reforms in the investment climate.”
