World Bank warns of fresh global recession, higher poverty in SSA

•Pegs global growth at 1.7 per cent, 2.9 per cent for Nigeria

The global economy may slide into recession this year if there is a resurgence of COVID-19 and escalation of the ongoing Russian-Ukrainian war, the World Bank has warned.
In its latest global economic prospects report released yesterday in Washington DC, America, the Bretton Woods institution noted that if this happens, it will be the first time in more than 80 years that two global recessions have occurred within the same decade.

The World Bank also cut Nigeria’s 2023 growth forecast to 2.9 per cent from a forecast of 3.1 per cent last year.
It 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.”

According to the report, the global economy is projected to grow by 1.7 per cent in 2023 and 2.7 per cent in 2024.

For sub-Saharan Africa, the institution delivered a damning report saying the poverty population is likely going to expand this year, no thanks to low per capita income.

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.”

In his comment on the findings of the report, the World Bank President, David Malpass noted: “The crisis facing development is intensifying as the global growth outlook deteriorates.

“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.”

Growth in advanced economies is projected to slow from 2.5 per cent in 2022 to 0.5 per cent in 2023.

Going by the report, by the end of 2024, GDP levels in emerging and developing economies will be roughly six per cent below levels expected before the pandemic.

It further noted that although global inflation is expected to moderate, it will remain above pre-pandemic levels.

In its assessment of the medium-term outlook for investment growth in emerging markets and developing economies, it projects that over the 2022-2024 period, gross investment in the economies is likely to grow by about 3.5 per cent on average – less than half the rate that prevailed in the previous two decades.

In his own remarks, Director of the World Bank’s Prospects Group, Ayhan Kose, said: “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.”