The International Monetary Fund (IMF) says global growth is projected to fall from 3.5 per cent in 2022 to 3.0 per cent in both 2023 and 2024.
This is according to the IMF’s latest World Economic Outlook (WEO) Update Report for July 2023: “Near-Term Resilience, Persistent Challenges” released on Tuesday.
The report said though the forecast for 2023 was modestly higher than predicted in the April 2023 WEO, it remained weak by historical standards.
“Compared with projections in the April 2023 WEO, growth has been upgraded by 0.2 percentage points for 2023, with no change for 2024.
“The forecast for 2023–24 remains well below the historical (2000–19) annual average of 3.8 per cent.
“It is also below the historical average across broad income groups, in overall Gross Domestic Product (GDP) as well as per capita GDP terms.”
The report said advanced economies continued to drive the decline in growth from 2022 to 2023, with weaker manufacturing, as well as idiosyncratic factors, offsetting stronger services activity.
“For advanced economies, the growth slowdown projected for 2023 remained significant, from 2.7 per cent in 2022 to 1.5 per cent in 2023.
“About 93 per cent of advanced economies are projected to have lower growth in 2023, and growth in 2024 among this group of economies is projected to remain at 1.4 per cent.”
While the report said in emerging markets and developing economies, the growth outlook was broadly stable for 2023 and 2024, although with notable shifts across regions.
“For emerging market and developing economies, growth is projected to be broadly stable at 4.0 per cent in 2023 and 4.1 per cent in 2024, with modest revisions of 0.1 percentage point for 2023 and –0.1 percentage point for 2024.”
The report showed growth in Sub-Saharan Africa is projected to decline to 3.5 per cent in 2023 before picking up to 4.1 per cent in 2024.
It revealed that economic growth in Nigeria in 2023 and 2024 is projected to gradually decline, in line with April WEO projections, reflecting security issues in the oil sector.
The report showed that economic growth in Nigeria is projected at 3.2 per cent in 2023 and decline to 3.0 in 2024.
The report said Global headline inflation was expected to fall from 8.7 per cent in 2022 to 6.8 per cent in 2023 and 5.2 per cent in 2024.
“Underlying (core) inflation is projected to decline more gradually, and forecasts for inflation in 2024 have been revised upward.”
It said inflation could remain high and even rise if further shocks occur, including those from an intensification of the war in Ukraine and extreme weather-related events, triggering more restrictive monetary policy.
The report said financial sector turbulence could resume as markets adjust to further policy tightening by central banks.
“China’s recovery could slow, in part as a result of unresolved real estate problems, with negative cross-border spillovers.
“Sovereign debt distress could spread to a wider group of economies.”
It, however, said on the upside, inflation could fall faster than expected, reducing the need for tight monetary policy, and domestic demand could again prove more resilient.
The report said in most economies, the policy priorities remained to achieve sustained disinflation while ensuring financial stability.
“Therefore, central banks should remain focused on restoring price stability and strengthening financial supervision and risk monitoring.
“Should market strains materialise, countries should provide liquidity promptly while mitigating the possibility of moral hazard.
“They should also build fiscal buffers, with the composition of fiscal adjustment ensuring targeted support for the most vulnerable.
The report said improvements to the supply side of the economy would facilitate fiscal consolidation and a smoother decline of inflation toward target levels.
However, African economies remain resilient, with average growth projected to stabilize at 4.1 percent in 2023–24.
However, the growth outlook is subject to significant downside risks, including i) subdued global growth weighing on Africa’s exports, persistence of tight global financial conditions exacerbating debt servicing costs; ii) significant losses and damages due to frequent extreme weather events exacerbating fiscal pressures; iii) the prolongation of Russia’s invasion of Ukraine, which is increasing global uncertainty; and iv) persistent disruptions to global supply chains. Other factors include elevated geopolitical risks due to upcoming national elections in some countries.
The African Economic Outlook 2023 underscores the urgency to fast-track climate action and green transitions to drive the continent’s inclusive and sustainable development.
For many developing countries, growth prospects have deteriorated amid tightening credit conditions and rising costs of external financing. In Africa and Latin America and the Caribbean, GDP per capita is projected to increase only marginally this year, reinforcing a longer-term trend of stagnating economic performance.
The least developed countries are forecast to grow by 4.1 per cent in 2023 and 5.2 per cent in 2024, far below the 7 per cent growth target set in the 2030 Agenda for Sustainable Development.
Global trade remains under pressure due to geopolitical tensions, weakening global demand and tighter monetary and fiscal policies.
The volume of global trade in goods and services is forecast to grow by 2.3 per cent in 2023, well below the pre-pandemic trend.
We therefore urge the federal government and relevant economic stakeholders in the country to quickly put appropriate measures in place to avert the imminent corresponding dangers.
