The United Nations recently released its World Economic Situations and Prospects report for 2023. The report was produced by the United Nations Department of Economic and Social Affairs (UNDESA), in collaboration with the United Nations Conference on Trade and Development (UNCTAD) and five other UN regional commissions. The agency projected a broad-based slowdown in the growth of the global economy in 2023, due to significant downside risks, including the elevated levels of inflation seen across advanced economies, aggressive monetary tightening stance by major central banks, and the Russia-Ukraine war which has resulted in disruptions to global supply chains. Consequently, the agency sees global growth slowing to 1.9% in 2023, before recovering to 2.7% in 2024.
The agency anticipates a slowdown in the pace of aggressive monetary tightening by major central banks across the world this year, noting the need to find a balance between taming inflation and speeding up economic recovery.
It further mentioned that the tightening of financial conditions globally has exacerbated financial and debt vulnerabilities in developing economies, resulting in increasingly costlier debt service, as well as hindering fiscal revenues required to support economic recovery.
The largest output downgrade was for the USA, whose growth was lowered by -140bps to 0.4% in 2023, and thereafter by 1.7% in 2024.
The weaker outlook for the US reflects tightening financial and monetary conditions, driven by the US Federal Reserve’s aggressive rate hikes which were made to curb rising inflation.
The 2023 forecast for the broad group of African economies was raised by 40bps to 3.8%. The forecast for 2024 was unchanged at 3.8%. This compares with the World Bank’s projections of 3.6% and 3.9% in 2023 and 2024 respectively.
The agency mentioned the downside risks to growth of the African economies in 2023, including persistent high inflation arising from food and energy price shocks, tighter global financial conditions, continuous depreciation of the region’s currencies, and lower capital inflows.
For Nigeria, the growth outlook of 3.0% for 2023 and 2024 is weaker, compared with estimates of 3.2% and 3.6% in 2022 and 2021 respectively.