Global recession looms as World Bank projects 1.7% growth in 2023

*Says long-lasting slowdown to hit developing countries hard

*As Nigeria’s VP calls for investment in technology for better future

By Motolani Oseni

Going by the latest global economic projections by the World Bank, countries across the world would be marking the first time this year in more than 80 years that two universal recessions have occurred within the same decade, as the financial institution said a sharp, long-lasting slowdown is expected to hit developing countries hard.

The World Bank on Tuesday said that global economy is projected to grow by 1.7 per cent in 2023 and 2.7 per cent in 2024, even as sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95 per cent of advanced economies and nearly 70 per cent of emerging market and developing economies.

However, Vice President Yemi Osinbajo, has called for more investment in technology in ensuring a better and prosperous future for Nigeria and Nigerians.

According to the World Bank’s latest Global Economic Prospects report, the global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine.

“Given fragile economic conditions, any new adverse development — such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions — could push the global economy into recession”.

World Bank Group President David Malpass said the crisis facing development is intensifying and emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment.

Growth in advanced economies is projected to slow from 2.5 per cent in 2022 to 0.5 per cent in 2023. Over the past two decades, slowdowns of this scale have foreshadowed a global recession, the report said.

In the US, growth is forecast to fall to 0.5 per cent in 2023 — 1.9 percentage points below previous forecasts and the weakest performance outside of official recessions since 1970.

In 2023, euro-area growth is expected at zero percent — a downward revision of 1.9 percentage points. In China, growth is projected at 4.3 per cent in 2023— 0.9 percentage points below previous forecasts.

Excluding China, growth in emerging markets and developing economies is expected to decelerate from 3.8 per cent in 2022 to 2.7 per cent in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financing conditions, and other domestic headwinds.

By the end of 2024, GDP levels in emerging and developing economies will be roughly 6 per cent below levels expected before the pandemic, the World Bank said.

Meanwhile, the Nigerian VP, Osinbajo has advised conglomerates and business owners in the country to look at technology and see how to change and improve the (business) model.

Osinbajo, who spoke yesterday while receiving a delegation of the Odu’a Investment Company at the Presidential Villa, Abuja, said, “legacy and history have a powerful pull, but it might be that what the future calls for is even greater and this is why we must be investing in technology.”

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The VP, however, commended the model where experts and players are allowed to lead in economic and business matters, saying “if the private sector runs businesses, it is far better because it will bring greater dividends.”

He cited the example of the Nigeria Liquefied Natural Gas Company (NLNG) saying “the NLNG is making a lot of money because the private sector has a controlling share and is making money for the country.”

He, therefore, advised that “there is a need to push the model of using smart and tested people from the private sector to manage enterprises and businesses that government has an interest in.”