Global Growth To Decelerate Sharply In 2023

Global Growth To Decelerate Sharply In 2023 – World Bank

By Soko Directory Team / Published June 7, 2023 | 6:00 am

KEY POINTS

Oil prices are expected to average US$84 per barrel in 2023, mostly reflecting weaker growth prospects in advanced economies. Agricultural commodity prices decreased in much of 2022 from their peaks in early 2022, helped by improved supply conditions.

KEY TAKEAWAYS

Ethiopia and Uganda maintained strong growth recovery, with real GDP growth estimated at about 6 percent for FY23 and projected to increase to above 6 percent in FY24.

Tanzania’s economy expanded by 4.6 percent in 2022, up from 4.3 percent in 2021, and is projected to increase by 5.1 percent in 2023.

World economic growth slowed in 2022 to 2.9 percent as surging inflation, energy, and value chain disruptions, and marked monetary tightening weighed on economic activity.

While inflationary pressures eased toward the end of the year, especially on account of normalizing commodity prices, inflation remains high globally, exceeding central bank targets in nearly all inflation-targeting countries.

Swift implementation of monetary tightening, while helping to soften inflationary pressures, has contributed to a significant deterioration of global financial conditions.

The collapse of Credit Suisse and two regional banks in the United States has revealed heightened vulnerabilities in the global financial system, lowering investor confidence and posing additional risks to the United States and the euro area economies.

Several emerging markets and developing economies have witnessed widespread capital outflows and rising sovereign borrowing costs, with countries with lower credit ratings experiencing a much more severe deterioration in financial conditions.

Reflecting ongoing monetary policy tightening and worsening financial conditions, global growth is projected to bottom out in 2023 at 1.7 percent before rising moderately to 2.7 percent in 2024.

Global commodity prices are expected to moderate in 2023 and remain mostly stable in 2024. Commodity prices declined 14 percent in the first quarter of 2023, standing roughly 30 percent below their historic peak in June 2022.

Nonetheless, prices of all major commodity groups and about four-fifths of individual commodities remain above their 2015-19 average levels. The Brent oil price fell 35 percent from its peak in June 2022 but remains well above its pre-pandemic average.

Global food prices are expected to continue to fall in 2023. Still, these prices are expected to stay above pre-pandemic levels, with the inflation-adjusted food price index at its second-highest level since 1975. The prices of coffee and tea declined throughout 2022.

Despite the declining global prices of agricultural commodities, domestic food price inflation across the world stays at historic high levels due to the slow price transmission from global to local prices and the stronger US dollar.

Economic growth in sub-Saharan Africa continues to weaken. Economic activity in sub-Saharan Africa is estimated to have slowed to 3.6 percent in 2022 from 4.1 percent in 2021.

However, this is 0.3 percentage points higher than the October 2022 forecast, supported by high commodity prices and buoyant domestic demand. Despite multifaceted challenges, the economies of the East Africa Community showed resilient performances.

Ethiopia and Uganda maintained strong growth recovery, with real GDP growth estimated at about 6 percent for FY23 and projected to increase to above 6 percent in FY24.

Tanzania’s economy expanded by 4.6 percent in 2022, up from 4.3 percent in 2021, and is projected to increase by 5.1 percent in 2023.

The sluggishness of the global economy with high inflation rates and challenging global and domestic financial conditions continue to weigh on the region’s economic activity, with sub-Saharan African growth for 2023 projected to further decelerate to 3.1 percent, 0.4. percentage points lower than at the time of the last Kenya Economic Update.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team