The International Monetary Fund has indicated in its latest World Economic Outlook Update that this year’s global economic growth will slow from 3.4% in 2022 to 2.9% in 2023, and rebound by 3.1% in 2024. The institution said that despite this outlook which is, by the way, less gloomy than that of October last year and before, it could represent a turning point, with growth bottoming out and inflation declining.
Key reasons for the decline have been pointed to Russia’s invasion of Ukraine and the fight against inflation which weigh on activity.
The chief Economist at the Economist Intelligence Unit, Simon Baptist said if the world was not dealing with these issues and the aftermath of covid, a good year in the global economy, based on the IMF’s methodology, would have been growth by four or four and a half per cent.
However, he still thinks this year would be “a bit of a soft year.” He added that inflation is in the ballpark of what central banks could be comfortable with. “In year-on-year terms, it is still much higher than what people are comfortable with, but the bulk of the price rises has already taken place from March to October last year “, said Baptist to the BBC.
India, and China which reopened recently remain bright spots, with just a tenth for the US and euro area combined.
Lower-income countries’ economies like Sierra Leone should expect a 4.9 per cent growth this year, and 5.6 in 2024. Nonetheless, the peaking inflation which is said to be taking an overturn could mean light on the horizon for Sierra Leone, which has been more badly hit by a cost of living crisis in the last couple of years than ever before.
The country’s consumer price inflation increased in December 2022 to 37.09 per cent, up by 2.04 percentage points from 35.05% in November 2022. This was also what happened the whole year except for January, and August, according to Stats SL, the country’s data collector and producer.
The government plans on increasing the minimum wage to NLe 800 (approximately USD 40) in April this year, but how far will it go to match the cost of living crisis which the government has blamed primarily on external factors is still the big question.