“While the forecast for 2023 is modestly higher than initially predicted, it remains well below the historical (2000–19) annual average of 3.8 percent,” Mr. Keita told lawmakers at the recent 2024 Budget Speech.
The minister said across regions, “growth is generally strongest in emerging Asian economies and weakest in the United States and major European economies. “Advanced economies are expected to experience a pronounced growth slowdown of 1.5% in 2023, from 2.6% in 2022,” he disclosed.
“Baseline growth in the United States is estimated at 2.1% in 2023, owing to resilient consumption growth and stronger business investment in the second quarter of 2023, before declining to 1.5% in 2024.”
He added that this resilience in consumption in the U.S. reflects gains in real income and a recovery in vehicle purchases due to still-tight labour market conditions.
“In the Euro Area, growth is expected to decline from 3.3 percent in 2022 to 0.7% in 2023, before increasing to 1.2% in 2024 given improved prospects for tourism and services in Italy and Spain. In Germany, however, growth is expected to contract from 1.8% in 2022 to -0.5% in 2023 due to fragility in manufacturing output and slower trading-partner demand (IMF, October 2023 World Economic Outlook).”
“The economic growth in emerging market and developing economies is projected to be broadly stable at 4.0% in both 2023 and 2024. This stable average rate masks wide growth variations between countries and among regions in this group of economies. In Emerging and Developing Asian countries, growth is expected to increase from 4.5% in 2022 to 5.2% in 2023 owing to an expected rebound in China from 3% in 2022 to 5.0% in 2023 (IMF, October 2023 World Economic Outlook).”
He further stated that China’s relative strong growth performance is driven by recovery in consumption. Stronger-than-expected net exports offsets underperformance in investment caused by ongoing real estate downturn in the country.
“Similarly, real GDP for Emerging and Developing countries in Europe is expected to increase by 1.6 percentage point owing to stronger-than-expected performance in Russia. The Russian economy registered a growth rate of 2.2 percent in 2023, from a recession of -2.1 percent in 2022, strengthened by a substantial fiscal stimulus, strong investment, and resilient consumption in the context of a tight labor market (IMF, October 2023 World Economic Outlook).”
He also highlighted that Global inflation remains high due to high energy and food prices. Global Crude Oil Prices saw its biggest monthly increase since January, which was attributed to the decision by OPEC to cut production levels. The FAO Food Price Index increased by 19.7% due to the suspension of the Black Sea Grain Initiative and India’s ban on exporting non- Basmati white rice. International prices of rice, in particular, continued to surge, reaching the highest level in almost 12 years.
“Nonetheless, global headline inflation is expected to decline from its peak of 8.7% in 2022 (annual average) to 6.9% in 2023. This is projected to decline further to 5.8 percent in 2024 as central banks raised interest rates to combat inflation. Thus, monetary tightening around the world and geopolitical tension will continue to weigh on economic activities.”
