The World Bank (WB) has recently released its Global Economic Prospects Report – January 2023, in which it forecasts that the GDP of Zambia will expand by 3.9% in 2023, and by 4.1% in 2024.
These estimates are similar to the ones the African Development Bank (AfDB) includes in its recently issued Africa’s Macroeconomic Performance and Outlook – January 2023.
According to the report, 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.
The global economy is projected to grow by a mere 1.7% in 2023 and 2.7% in 2024.
The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95% of advanced economies and nearly 70% of emerging market and developing economies.
In the United States, growth is forecast to fall to 0.5% 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% in 2023—0.9 percentage point below previous forecasts.
Furthermore, the bank warns that 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 again.
This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.
Forecasts for Emerging Economies in 2023
Excluding China, growth in emerging markets and developing economies (EMDEs) is expected to decelerate from 3.8% in 2022 to 2.7% in 2023, reflecting significantly weaker external demand compounded by high inflation, currency depreciation, tighter financing conditions, and other domestic headwinds.
Over the next two years, per-capita income growth in emerging markets and developing economies is projected to average 2.8%—a full percentage point lower than the 2010-2019 average.
World Bank Group President David Malpass explains: “Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates. Weakness in growth and business investment will compound the already-devastating reversals in education, health, poverty, and infrastructure and the increasing demands from climate change.”
In detail, over the 2022-2024 period, gross investment in emerging economies is likely to grow by about 3.5% on average—less than half the rate that prevailed in the previous two decades.
Ayhan Kose, Director of the World Bank’s Prospects Group, stressed that “National policies to boost investment growth need to be tailored to country circumstances but they always start with establishing sound fiscal and monetary policy frameworks and undertaking comprehensive reforms in the investment climate.”
This is why the report underscores the urgent need for EMDEs to design policies that attract and incentivize new investment and lays out a menu of options for policymakers to accelerate investment growth.
EMDEs strategies should feature fiscal, structural, and regulatory measures to boost public and private investment, and fiscal and monetary policies that support stable, market-based currencies and productive investment are particularly critical to promote growth, higher median income, and poverty reduction.
Forecasts For Sub-Saharan African Economies in 2023
Growth in Sub-Saharan Africa is projected to edge up in 2023 to 3.6%—a 0.2 percentage point downward revision from the June forecast—before picking up to 3.9 percent, in 2024.
In Sub-Saharan Africa, which accounts for about 60% of the world’s extremely poor, growth in per-capita income over 2023-24 is expected to average just 1.2%, a rate that could cause poverty rates to rise, not fall.
Even though an expected moderation of global commodity prices should temper cost-of-living increases, tighter policy stances to address elevated inflation and public debt will weigh on domestic demand.
Meanwhile, weakening growth in advanced economies and China is expected to pose headwinds for external demand, particularly among exporters of industrial commodities.
Constrained access to external financing, tight fiscal space, and high borrowing costs are expected to markedly limit many governments’ ability to spur faster growth.