Freetown, SIERRA LEONE – An important milestone has been reached as Africa plays host to the annual meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) in Marrakech, Morocco, from October 9th to 15th, 2023. This marks the second time in half a century that these meetings are being held on the African continent, with the last such occasion occurring in Nairobi in 1973. The event brings together finance ministers and central bank governors from 190 countries.
In her opening speech in Abidjan last Thursday, IMF Chief Kristalina Georgieva highlighted the significant changes that have occurred globally in the fifty years since the meetings were last held in Africa. These transformations include increased life expectancy, a reduction in global poverty, the adaptation of the international monetary system to a flexible exchange-rate regime, and the revolutionary impact of technology on work, entertainment, and communication. However, Georgieva emphasized that inequalities have grown both within and among countries, and the world now faces an existential climate crisis. Additionally, global economic growth has been on a declining trajectory over the last decade, necessitating actions to pave the way for the next 50 years. The goal is to establish pathways to robust and sustainable growth that is inclusive for all.
According to Georgieva, achieving a prosperous world economy in the 21st century is contingent upon the prosperity of Africa. Advanced economies are experiencing rapid ageing, but they possess significant capital reserves. The key challenge is to enhance the connection between this capital and Africa’s abundant human resources, injecting dynamism into the currently lacklustre global growth outlook.
Regarding the economic outlook, Georgieva acknowledged the remarkable resilience of the world economy, with positive developments in the first half of 2023 due to stronger-than-expected demand for services and progress in curbing inflation. This has increased the likelihood of a soft landing for the global economy. However, caution is advised, as the recovery from recent shocks remains slow and uneven. Global growth is currently well below the 3.8 per cent average of the two decades preceding the pandemic. Furthermore, medium-term growth prospects have deteriorated.
This disparity in economic fortunes is deepening, both among different country groups and within individual nations. Economic scarring, resulting from cumulative global output losses of $3.7 trillion since 2020, is unevenly distributed across countries. While the United States is the only major economy to have returned to its pre-pandemic growth trajectory, the rest of the world, particularly low-income countries, lags due to limited economic buffer capacity and support for vulnerable populations.
Georgieva attributes this divergence to differences in policy space, macroeconomic fundamentals, reliance on fuel and food imports, the balance between goods and services in the economy, trade dynamics, reform progress, and the pace of inflation control. These factors influence countries’ policy choices and economic performance, leading to increased divergence among nations. ZIJ/9/10/2023