A global economic slowdown projected by the International Monetary Fund (IMF) is expected to increase pressure on developing and low-income countries like Nigeria, because of exacerbating debt burdens and depriving support of the international community.
Tobias Andrian, financial adviser and director of the Monetary and Capital Markets Department of the IMF, noted this on Tuesday at the ongoing World Bank and IMF spring meetings Conference in Washington DC, USA, calling for concrete measures by emerging economies to make the financial stability process faster and more transparent this year.
Speaking at the 2023 Global Financial Stability Report, Andrian said, “The global economic growth is expected to be lower than earlier projected this year, signalling potential economic downturn.
“What we’re looking for is concrete steps by emerging economies that will make the process operate faster, and in a more transparent way. And something that debtor countries can look at and understand more clearly on how long things will take.
“Developing countries may face mounting debt and insufficient international support, risking another lost decade”.
He noted further-
“The banking crisis highlights long-neglected financial fragilities and regulatory weaknesses.
“Declining energy costs lead to lower inflation, but elevated food prices maintain a high cost of living in many developing countries.
“Growing global asymmetries threaten developing countries’ resilience, requiring stronger multilateral action and an urgent focus on sovereign debt architecture”.
On debt crisis, he argued that a record number of developing nations are at risk of a debt crisis, with ballooning inflation, escalating borrowing costs and a strong dollar jacking up the cost for borrowing countries to repay loans and raise fresh money.
Adrian, who emphasised that a lower interest rate is a choice by the country’s central bank (CBN) policy, said-
“Developing countries may face mounting debt and insufficient international support, risking another lost decade”.
He noted that the fact that emerging markets’ sales of shares are lower than in the USA market is to ensure the security of their shares.
“It is the policy tool of the emerging markets to curb slowdown by both the fiscal and monetary authorities to slow down.”
He noted that –
“the banking crisis highlights long neglected financial fragilities and regulatory weaknesses.
“Declining energy costs lead to lower inflation, but elevated food prices maintain a high cost of living in many developing countries”.
According to Adrian-
“Growing global asymmetries threaten developing countries’ resilience, requiring stronger multilateral action and an urgent focus on sovereign debt architecture.
It would be recalled that the IMF Managing Director, Kristalina Georgieva, last week also took aim at China. She told the country’s new top economic leader that Beijing needed to “speed up” its work on debt restructuring requests.
World Bank Chief David Malpass said on Monday he hoped meetings this week with Chinese officials could help “break the ice” on desperately needed debt relief for poor countries. Yellen has no formal meetings with Chinese counterparts on her schedule. However, the U.S. official said officials from the Biden administration and China will continue dialogue –
“where we’re able to manage the process”.
According to the IMF, Nigeria’s slowdown was contrary to stronger growth prospects. Especially for emerging markets and developing economies during the specified periods. A recent forecast by the Fund also indicated that Nigeria would be performing below low-income developing countries. The GDP is expected to grow by 5.1% on average in low-income countries and Nigeria is below that.
However, the new projection by the IMF indicates that the global economic growth rate would be challenged. This is mostly due to crises associated with the global financial sector distress and the ongoing Ukrain-Russia war.
These were some of the highlights of its World Economic Outlook (WEO) report titled, ‘Feeble and Uneven Growth’. It was released in Washington DC during the on-going Spring Meetings of the World Bank/ IMF.
The report stated-
‘‘The baseline forecast is for global output growth, estimated at 3.4 per cent in 2022, to fall to 2.8 per cent in 2023, 0.1 percentage point lower than predicted in the January 2023 WEO update, before rising to 3.0 per cent in 2024.
“This forecast for the coming years is well below what was expected before the onset of the adverse shocks in early 2022.
“Compared with the January 2022 WEO update forecast, global growth in 2023 is 1.0 percentage points lower, and this growth gap is expected to close only gradually in the coming two years.
“The baseline prognosis is also weak by historical standards. During the two pre-pandemic decades (2000–09 and 2010–19), world growth averaged 3.9 and 3.7 percent a year, respectively.
“For emerging markets and developing economies, economic prospects are on average stronger than for advanced economies, but these prospects vary more widely across regions. On average, growth is expected to be 3.9 per cent in 2023 and to rise to 4.2 per cent in 2024.
“In low-income developing countries, GDP is expected to grow by 5.1 per cent, on average, over 2023–24, but projected per capita income growth averages only 2.8 per cent during 2023–24, below the average for middle-income economies (3.2 per cent) and so below the path needed for standards of living to converge with those in middle-income economies’’.
cc: Independent Ng
