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Abstract
In a worsening global environment, economies in the Middle East and Central Asia are being buffeted by a confluence of shocks: a global slowdown, high and volatile food and energy prices, faster and stronger than expected tightening of financial conditions, and the risk of fragmentation. The region’s emerging market and middle-income economies (EM&MIs) and low-income countries (LICs) are hit hard, with many facing curtailed access to market financing, while oil-exporting countries are being buffered by still-high energy prices. The adverse impact of Russia’s war in Ukraine on the Caucasus and Central Asia (CCA) has thus far been milder than expected. Still, the CCA’s strong ties to Russia entail substantial risks to the region’s outlook. The most urgent policy challenge for all countries is to tackle the cost-of-living crisis by restoring price stability, protecting vulnerable groups through targeted support, and ensuring food security. Policy trade-offs in EM&MIs and LICs have become more pronounced than ever, as they also need to preserve debt sustainability and financial stability. Oil exporters have the opportunity to maximize the benefits of the oil windfall by building buffers and advancing their diversification plans. CCA countries should carefully assess the magnitude and durability of the initial spillovers from the war in Ukraine and adjust their policy mix accordingly. Limited policy space in many countries raises the urgency of structural reforms to bolster economic growth while transforming economies to become more resilient, sustainable, diversified, and inclusive.
Abstract
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Abstract
After the strong rebound of 6.5 percent posted in 2021, growth in Asia and Pacific is expected to moderate to 4.0 percent in 2022 amid an uncertain global environment and rise to 4.3 percent in 2023. Inflation has risen above most central bank targets, but is expected to peak in late 2022. As the effects of the pandemic wane, the region faces new headwinds from global financial tightening and an expected slowdown of external demand. While Asia remains a relative bright spot in an increasingly lethargic global economy, it is expected to expand at a rate that is well below the average rate of 5½ percent seen over the preceding two decades. Policy support is gradually being withdrawn as inflation rises and idle capacity is utilized, but monetary policy should be ready to tighten faster if the rise in core inflation turns out to be more persistent. The region’s rising public debt lev¬els call for continued fiscal consolidation, so interven¬tions to mitigate global food and energy shocks should be well targeted, temporary, and budget neutral. Structural reforms are needed to boost growth and mitigate the scarring that is expected from the pan¬demic, especially making up for lost schooling through investments in education and training, promoting diversification, addressing the debt overhang from the pandemic, and harnessing digitalization. Strong multilateralism—including through international organizations, the Group of Twenty and regional processes—will be needed to mitigate geo-economic fragmentation and deliver much needed progress on climate change commitments.
Abstract
Sub-Saharan Africa’s recovery has been abruptly interrupted. Last year, activity finally bounced back, lifting GDP growth in 2021 to 4.7 percent. But growth in 2022 is expected to slow sharply by more than 1 percentage point to 3.6 percent, as a worldwide slowdown, tighter global financial conditions, and a dramatic pickup in global inflation spill into a region already wearied by an ongoing series of shocks. Rising food and energy prices are impacting the region’s most vulnerable, and public debt and inflation are at levels not seen in decades. Against this backdrop, and with limited options, many countries find themselves pushed closer to the edge. The near-term outlook is extremely uncertain as the region’s prospects are tied to developments in the global economy and with a number of countries facing difficult sociopolitical and security situations at home. Within this challenging environment, policymakers must confront immediate socioeconomic crises as they arise, while also endeavoring to reduce vulnerabilities to future shocks, building resilience. Ultimately, however, the region’s safety and prosperity will require high-quality growth and the implementation of policies that will set the stage for a sustainable recovery, helping countries move away from the edge.
Abstract
La reprise économique en Afrique subsaharienne a connu un coup d’arrêt brutal. L’an dernier, l’activité a fini par rebondir, ce qui a porté la croissance du PIB à 4,7 % en 2021. En revanche, en 2022, la croissance devrait ralentir fortement de plus de 1 point de pourcentage, à 3,6 %. En effet, le ralentissement de l’économie, un resserrement des conditions financières et une hausse spectaculaire de l’inflation à l’échelle mondiale se propagent à une région déjà éprouvée par une série ininterrompue de chocs. Le renchérissement des produits alimentaires et de l’énergie pénalise les populations les plus vulnérables de la région, tandis que la dette publique et l’inflation se situent à des niveaux inédits depuis des décennies. Dans ce contexte, et devant le peu d’options qui s’offrent à eux, de nombreux pays sont poussés sur la corde raide. Les perspectives à court terme pour l’Afrique subsaharienne sont extrêmement incertaines, sachant qu’elles sont liées à l’évolution de l’économie mondiale et que, sur le plan intérieur, plusieurs pays sont confrontés à une situation sociopolitique et sécuritaire délicate. Dans cet environnement difficile, les dirigeants doivent surmonter des crises socioéconomiques urgentes dès qu’elles surviennent, tout en s’efforçant aussi de réduire les facteurs de vulnérabilité face aux futurs chocs, ce qui renforcera la résilience. À terme cependant, une croissance de qualité s’avérera indispensable pour la stabilité et la prospérité de la région, et les mesures prises devront créer les conditions d’une reprise durable, ce qui aidera les pays à se mettre hors de danger.
Abstract
A recuperação da África Subsariana foi subitamente interrompida. No ano passado, a atividade na região começou finalmente a recuperar, tendo o crescimento do PIB em 2021 aumentado para 4,7%. No entanto, o crescimento deverá abrandar em 2022 em mais de 1 ponto percentual, situando-se em 3,6%. De facto, a desaceleração da atividade económica, as condições financeiras mais restritivas e a subida drástica da inflação registadas a nível mundial estão a ter repercussões numa região já afetada por uma série de choques em curso. O aumento dos preços dos produtos alimentares e energéticos está a afetar os mais vulneráveis da região e a dívida pública e a inflação estão a aproximar-se de níveis que já não se verificavam há décadas. Face a este cenário, e com opções limitadas, muitos países são empurrados ainda mais para o limiar. As perspetivas de curto prazo da região são extremamente incertas na medida em que estão intrinsecamente ligadas à evolução da economia mundial e vários países enfrentam situações sociopolítica e de segurança difíceis. Neste contexto desafiante, as autoridades devem enfrentar crises socioeconómicas imediatas à medida que estas surgem, ao mesmo tempo que se esforçam por reduzir as vulnerabilidades a choques futuros, construindo resiliência. Porém, em última análise, a segurança e prosperidade da região exigirão um crescimento de elevada qualidade e a implementação de políticas que irão lançar as bases para uma recuperação sustentável, afastando os países do limiar.
Abstract
The report explores how fiscal policy can foster resilience by protecting households against large income and employment losses. Governments face increasingly difficult trade-offs in tackling the spikes in food and energy prices when policy buffers are largely exhausted after two years of pandemic. They should prioritize protecting vulnerable groups through targeted support while keeping a tight fiscal stance to help reduce inflation. Building fiscal buffers in normal times would allow governments to respond swiftly and flexibly during adversities. Several fiscal tools, such as job-retention schemes, have proven useful to preserve jobs and income for workers. Social safety nets should be made more readily scalable and better targeted, leveraging digital technologies. Exceptional support to firms should be reserved for severe situations and requires sound fiscal risk management.