Title: Global economic recovery remains fragile: developing countries face persistent challenges
Introduction :
In a report recently published by the Economic Commission for Africa (ECA), it is highlighted that despite a moderate improvement in global growth forecast for 2025, it will remain below the growth rate observed before the pandemic. Tight financial conditions and growing risks of geopolitical fragmentation are weighing on global trade and industrial production. While the scenario of a recession in 2023 has been avoided, a prolonged period of weak growth is expected. Developing countries, particularly vulnerable and low-income countries, face weak growth prospects, making recovery from pandemic-related losses more difficult.
Challenges facing developing countries:
The report highlights the divergent short-term growth prospects of developing countries. Economic growth in Africa is expected to remain weak, falling on average from 3.3% in 2023 to 3.5% in 2024. Additionally, although global inflation has eased in 2023, it remains above the 2010 average. -2019. Food inflation could worsen food insecurity and poverty. Higher borrowing costs will exacerbate debt sustainability risks for developing countries. The reduction of excessive liquidity by the major central banks of developed countries will have significant effects on the latter.
The global economic recovery is hampered:
Global investment will remain weak and the business outlook will become increasingly uncertain. Gross fixed capital formation grew by an estimated 1.9% in 2023, down from 3.3% in 2022 and well below the average growth of 4% observed between 2011 and 2019. Trade The international market is losing its power as an engine of growth. In 2023, global trade growth slowed significantly to 0.6%, down from 5.7% in 2022. It is forecast to recover to 2.4% in 2024, below trend. pre-pandemic by 3.2%.
Challenges for central banks and the fiscal space:
Central banks around the world will continue to face a delicate situation and difficult trade-offs in 2024, seeking to manage inflation, revive growth and ensure financial stability. Central banks in developing countries will face additional challenges such as growing balance of payments concerns and debt sustainability risks. Additionally, tax space is shrinking due to higher interest rates and tighter liquidity. Fiscal deficits and debt sustainability raise new concerns.
Conclusion :
The global economic recovery remains fragile and developing countries face persistent challenges. Growth prospects are weak, inflation remains high and international investment is declining. Central banks face complex choices and governments must find ways to revive growth while maintaining financial stability. A robust policy approach is needed to address these challenges and foster a sustainable economic recovery.