Trade, Disrupted
In this issue, we focus on the forces disrupting the established international trade order, such as Russia’s war on Ukraine and geopolitical fragmentation. We also look at how global trade is being reshaped by technology and policy priorities, such as climate change and equality.
Trade Integration in Africa: Unleashing the Continent's Potential in a Changing World
Trade integration through the African Continental Free Trade Area could increase real GDP per capita, reduce poverty, and raise living standards. But unlocking these benefits will require investment in physical and human capital, a robust private sector, and social safety nets that support vulnerable communities. Greater regional trade integration and policy reforms are required in this changing world.
Safeguarding Macroeconomic Stability amid Continued Uncertainty
The economies of the Middle East and Central Asia proved resilient in 2022, despite a series of global shocks. However, this year—and potentially next—growth is expected to slow in the Middle East and North Africa as tight policies to fight inflation, reduce vulnerabilities, and rebuild buffers start to dent economic activity in many countries, and agreed oil production cuts curb growth in oil exporters. Inflation is projected to remain persistent.
Recovery Unabated amid Uncertainty
Economic growth has tumbled across Europe, inflation remains too high, and financial sector risks have materialized. Taming sticky inflation while avoiding financial stress and a recession will require tighter macroeconomic policies—tailored to changing financial conditions, stronger financial regulation and supervision, and bolder supply-side reforms that heal scars from the COVID-19 and energy crises.
Europe's Balancing Act: Taming Inflation without a Recession
Economic growth has tumbled across Europe, inflation remains too high, and financial sector risks have materialized. Taming sticky inflation while avoiding financial stress and a recession will require tighter macroeconomic policies—tailored to changing financial conditions, stronger financial regulation and supervision, and bolder supply-side reforms that heal scars from the COVID-19 and energy crises.
A Funding Squeeze Has Hit the Region Hard
Persistent global inflation and tighter monetary policies have led to higher borrowing costs for sub-Saharan African countries and have placed greater pressure on exchange rates. Indeed, no country has been able to issue a Eurobond since spring 2022. The interest burden on public debt is rising, owing to a greater reliance on expensive market-based funding combined with a long-term decline in aid budgets.
A Rocky Recovery
The baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a plausible alternative scenario with further financial sector stress, global growth declines to about 2.5 percent in 2023 with advanced economy growth falling below 1 percent.
Safeguard Economic Stability, Support Vulnerable Countries, Sustain Our Future Prosperity
The Managing Director’s latest Global Policy Agenda states the global economy is at another highly uncertain moment. Tentative signs of stabilization earlier this year have receded, and the outlook is increasingly risky and uncertain.
Safeguarding Financial Stability amid High Inflation and Geopolitical Risks
Financial stability risks have increased rapidly as the resilience of the global financial system has been tested by higher inflation and fragmentation risks. Chapter 1 analyzes the recent turmoil in the banking sector and the challenges posed by the interaction between tighter monetary and financial conditions and the buildup in vulnerabilities since the global financial crisis. Chapter 2 examines nonbank financial intermediaries (NBFIs) and the vulnerabilities that can emerge from elevated leverage, liquidity mismatches, and high levels of interconnectedness.
