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Challenges for Global Economic Growth 

The world economy today is in a precarious situation. As of 25 October 2023 it was reported that 771, 549, 718 confirmed cases of COVID-19 had occurred,  resulting in nearly 7 million deaths from the virus.[1]  The toll of the virus on the global economy has also been very severe.[2] Nevertheless, towards the end of the worst phase of the pandemic the world economy had started to recover.  As an example, it has been reported that by 21 October 2023, a total of 13,533,464.652 vaccines had been administered.  What the world needs most is a period of relative calm where the administration of the vaccines could be speeded up, supply chains repaired and world, trade, investment and economic growth could accelerate. Starting from the state of affairs at the trough of the pandemic, improved health outcomes, higher economic growth and world peace could follow. This began well but has not been able to sustain itself.

The latest World Economic Outlook [3] forecasts that global economic growth would slow from 3.5 percent in 2022 to 3.0 percent in 2023, and 2.9 percent in 2024, which is well below the historical average of 3.8 percent.  Economic growth in advanced economies would slow down from 2.6 percent in 2022, 1.5 percent in 2023 and 1.4 percent in 2024. Emerging market economies would slow down from 4.1 percent in 2022 to 4.0 percent in 2023 and 2024. Tighter monetary policy has led to a slowdown in the rate of inflation. There is a moderation in economic growth and inflation in the world economy and in various regional country groups.  In particular, the inflation outlook remains grim, particularly since inflationary expectations have settled in. This means that interest rate cuts, so necessary to boost global growth, will not be forthcoming soon which would then further suppress output prospects and raise debt payments for both the public and private sectors. Therefore, the prospects for high levels of output are not very sanguine.  

According to the UN, global public debt reached an astonishing US$92 trillion in 2022 [4]. Debt levels in major countries of the world including the US, Japan, China and EU are very high so that there now exists an international debt crisis,[5] The Delhi Declaration at the recently concluded G20 summit emphasized the importance of addressing debt vulnerabilities in low and middle-income countries in an effective, comprehensive, and systematic manner. Global action to address climate change remains inadequate. Notwithstanding the fact that G20 nations collectively contribute approximately 80 percent to global emissions, the Summit could not put together a consensus on the phase-out of fossil fuels. However, under the
Green Development Pact for a Sustainable Future,put out by the G20, members resolved to pursue environmentally sustainable and inclusive economic growth and development in an integrated, holistic, and balanced manner.  The summit committed to accelerating actions to address The summit committed to accelerating actions to address ​environmental challenges and reaffirmed steadfast commitments to an effective implementation of the temperature goal made in the Paris Agreement to limit the temperature to 1.5°C above pre-industrial levels. Only time will tell whether these goals will be reached.

To compound maters further there are two very disastrous wars being fought out (Russia Ukraine war) and the (Israel Hamas war)   in the Middle-East.  A number of other countries are indirectly involved in these wars and both these wars have the potential of spreading well beyond their current confines. In addition, a number of flash points persist in the global arena and the risk of widespread, even global, conflict is real. Apart from the risk of further escalation  the wars could raise the prices of critical commodities and inputs (particularly petroleum products).  This would raise inflation and hurt already suffering supply chains. Higher inflation will lead to higher interest rates and even higher debt payment obligations. 

An additional issue is taking steps towards the development of a mechanism for a voice for the Global South in world Affairs for tackling the economic gap between developed and developing countries, achieving sustainable development, and providing an avenue for developing and emerging market economies to play a significant role in world affairs for the betterment of all. Not much has changed since the Second World War in international economic and political relations even though developing and emerging market countries are now contributing very significantly to the world economy.  This is not just inequitable but also inefficient.

From the recently concluded G20 the message became quite clear that in the emerging global order the world will need to work together as no one nation or small group of nations alone can successfully address the problems that are global. Some movement toward this was achieved at the recently concluded G20 summit when the African Union was made a member of the G20. This move was not just equitable but also efficient because it is becoming clear that in the next 30-40 years or so Africa is likely to become one of fastest, if not the fastest, growing regions in the world.  Africa will also soon be home to more than 1 billion people.

After the end of the COVID period, the world economy needed a period of considerable calm, mutual cooperation and peace to make up ground for the lost years during the pandemic. However, on many fronts the problems are only being exacerbated. Some corrective steps are being taken in some areas – e.g., development of non fossil fuel sources of energy but much remains to be done. 


Professor Raghbendra Jha, PhD (Columbia), FWIF

Professor Emeritus of Economics, Australian National University 

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