Global And Regional Growth Continues To Weaken Amid Disruptions In Oil And Gas Flows

By Soko Directory Team / Published December 8, 2022 | 9:31 am

KEY POINTS

GDP growth in China has slowed at a sharp rate, reflecting COVID- 19 lockdowns and the deepening real estate crisis, with major global spillovers.

KEY TAKEAWAYS

East Africa is experiencing the worst drought in four decades and bracing for its fifth consecutive failed rainy season, with close to 20 million people facing starvation.

Global sentiment deteriorated in 2022, raising fears of a global economic recession. The Russian invasion of Ukraine and subsequent sanctions disrupted world markets, most notably by sharply raising global commodity prices.

With energy supplies to Europe severely disrupted, the benchmark price of natural gas delivered to Europe soared to $70.0/mmbtu in August 2022, up more than four-fold since 2021.

To prevent inflation from becoming entrenched, central banks – especially of the advanced economies – are aggressively tightening monetary policy.

GDP growth in China has slowed at a sharp rate, reflecting COVID- 19 lockdowns and the deepening real estate crisis, with major global spillovers.

Global business activity, as measured by the JP Morgan global composite Purchasing Managers’ Index (PMI), contracted for a second consecutive month in September 2022 while global investor confidence has plummeted amid concerns over the global macroeconomic environment and central banks’ aggressive policy tightening.

The combination of slow growth and tightening financial conditions amid high levels of debt is leading to fiscal pressures and weak investment in many Emerging Markets and Developing Economies (EMDE) countries.

The World Bank’s baseline forecast is for global growth to slow from 5.7 percent last year to 2.9 percent in 2022, 1.2 percentage points lower than January 2022 forecast.

Economic activity in sub-Saharan Africa is slowing amid global and regional economic headwinds. The sub-Saharan African economy is experiencing shocks from the slowing down of the global economy, tightening global financial conditions, elevated inflation driven by rising food and fuel prices, and rising risk of debt distress.

Adverse weather conditions, particularly across the Horn of Africa, have exacerbated inflationary pressures caused by global supply chain disruptions and the war in Ukraine.

East Africa is experiencing the worst drought in four decades and bracing for its fifth consecutive failed rainy season, with close to 20 million people facing starvation.

Faced with mounting inflationary pressures and fears of large capital outflows associated with widening spreads, central banks across the region have raised policy rates.

Economic growth in sub-Saharan Africa is expected to slow from 4.1 percent in 2021 to 3.3 percent in 2022, a downward revision of 0.3 percentage points from the April 2022 forecast.

About Soko Directory Team

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