Global inflation expected to moderate in 2023
By Zion Rufus
With the war in Ukraine currently fueling higher inflation and financial crisis across the globe, the Global Economic Prospects report from the World Bank has revealed that global inflation is expected to moderate in 2023, but will likely remain above inflation targets in many economies.
According to the report, the war in Ukraine has led to a surge in prices across a wide range of energy-related commodities. In the same vein, higher energy prices will lower real incomes, raise production costs, tighten financial conditions, and constrain macroeconomic policy especially in energy-importing countries.
World Bank President, David Malpass said: “The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth. For many countries, recession will be hard to avoid. Markets look forward, so it is urgent to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to counter capital misallocation and inequality.”
Meanwhile, growth in advanced economies has been projected to sharply decelerate from 5.1 percent in 2021 to 2.6 percent in 2022—1.2 percentage point below projections in January. It is also expected to further moderate to 2.2 percent in 2023, largely reflecting the further unwinding of the fiscal and monetary policy support provided during the pandemic.
However, the report notes that if inflation remains elevated, a repeat of the resolution of the earlier stagflation episode could translate into a sharp global downturn along with financial crises in some emerging markets and developing economies.
In Nigeria, inflation rate shot up to 15.92% in March of 2022, the highest price hike since October 2021, with prices of most commodities soaring. Cost of food increased 17.20%; prices of imported food rose 17.56 percent year-on-year in March, accelerating from a 17.48 percent advance in February, according to data shared by the National Bureau of Statistics (NBS), Nigeria.
Per the World Bank report for the Middle East and North Africa (Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates and Yemen), growth is forecast to accelerate to 5.3% in 2022 before slowing to 3.6% in 2023.
For Sub-Saharan Africa (republic of the Congo, Côte d’Ivoire, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau), growth is forecast to moderate to 3.7% in 2022 and rise to 3.8% in 2023.
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