The annual meetings of the International Monetary Fund (IMF) and the World Bank, which started on Monday in Marrakesh, Morocco, have shed light on the ongoing difficulties for the global economy. The World Economic Outlook report highlighted the enduring impact of factors such as the COVID-19 pandemic, geopolitical conflicts, and a cost of living crisis.
Economic activity continues to lag, especially in emerging markets and developing economies. This is due to a combination of lingering pandemic effects, geopolitical issues, restrictive monetary policies, and climate-related disruptions. The report predicts a decrease in economic activity for advanced economies from 2.6% in 2022 to 1.5% in 2023 and further down to 1.4% in 2024. The only exception is the US which is expected to show stronger growth.
Emerging markets are also predicted to experience minor shrinkage in growth. The medium-term global growth forecast is at a record low of 3.1%. Even though a gradual decrease in inflation is expected, it’s unlikely to reach target levels until as late as 2025.
During these meetings, IMF chief Kristalina Georgieva acknowledged a $3.6 trillion global output loss since 2020 but dismissed the role of these institutions in socio-economic issues through austerity measures. An example of this was Nigeria’s energy subsidy reform that resulted in fuel prices tripling.
Critics like Oxfam have voiced concerns over the human costs of these austerity measures. They claim that these policies are forcing 57% of the world’s poorest countries into a starvation diet of $229 billion spending cuts by 2029 and compelling low-income countries into nearly $500 million daily debt repayments.
These meetings mark the first return of these Bretton Woods institutions to Africa in decades, despite their continued focus on austerity measures. The outcomes of these deliberations will have significant implications for the global economy and particularly for emerging markets and developing economies.
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