As in the rest of the world, inequality is increasing in India.
The world economy is not doing well. The atmosphere was heavy during the virtual spring meetings of the two financial institutions, the International Monetary Fund (IMF) and the World Bank (WB), which were held from April 18 to 24. In the background the double crisis of the pandemic and the war in Ukraine. After an exceptional recovery in 2021, the outlook for global growth has contracted from 6.1% in 2021 to 3.6 in 2022, 0.8% and 0.2% lower than what was expected in January. † The war in Ukraine has led to a costly humanitarian crisis. In addition, the economic damage caused by the conflict will contribute to a sharp slowdown in global growth in 2022 and fuel inflation. Fuel and food prices are rising rapidly. However, it is the vulnerable populations of low-income countries who suffer most from this situation. noted the IMF’s April 19 economic outlook report. The curve is downward for the different regions, accompanied by a clear heterogeneity. The United States will grow 2.3% against 5.7% in 2021, while the eurozone will grow 2.8% in 2022. Developed countries’ economies will grow by 3.3% and the Middle East and North Africa (MENA region) will reach 5% in 2022 from 5.8% in 2021.
These estimates are likely to be revised downwards in the next revisions in July, as well as the projections for 2023, analyzes Hussein Soliman, a macroanalyst at the Center for Political and Strategic Studies (CEPS) ofAl Ahram† † IMF researchers have been working on these predictions since October 2021, and the war in Ukraine took place in late February 2022, meaning the effects had not been fully considered. The proof is that the forecasts for 2023 have been revised further downwards ‘ continues the expert. In this tense context, Kristalina Georgieva, General Manager of the IMF, sounded the alarm: We are facing a serious setback on the road to global recovery. The war in Ukraine has destabilized millions of lives and many aspects of the global economy †
The heterogeneity of global growth reveals the complex aspect of the twin crisis the world economy is experiencing, which further exacerbates inequality. This was well explained by Mahmoud Mohieddine, executive director of the IMF and member of the board of directors representing Egypt and the Arab states, in a series of interventions Al Arabiya† † Over the past two decades, there has been a rapprochement between the different regions of the world in terms of growth and per capita income. But the pandemic has brought about surprising and structural changes. For the first time, we are faced with two locks. One within countries with huge differences in income per capita and another gap will arise within countries whose growth will be very uneven “, he analyzed. A situation that has worsened with the war in Ukraine and the rise in the prices of energy and basic necessities.
Soliman explained that these two gaps are worsening at the same time. Within countries, there are sectors that are booming (medical and automotive), while others are stagnant in terms of income. † The incomes of entrepreneurs in the same sectors are increasing, while the working population is in precarious conditions. At the country level, the winners were the oil exporting countries. Saudi Arabia posted 7.6% growth and the United Arab Emirates 4.2% “, he explains.
David Malpass, chairman of the WB, made no secret of his fears about this, stating that we are dealing with a number of intertwined crises. The toll gets heavier: Today, in the MENA region, one in five people lives in conflict zones. The war in Ukraine has displaced 10 million more people than there were 30 million in 2020. The most vulnerable are suffering the effects of precarious medical conditions, to which have been added the economic consequences of incarceration and war. Millions of people have lost their lives and many more are suffering †
The specter of stagflation
In this context of inequalities and inequality, and rising energy and commodity prices, the term stagflation returned as a common thread running through the virtual gatherings. Stagflation is an economic condition in which inflation is very high, accompanied by slowing growth rates and rising unemployment. † The war led to increases in commodity prices and widespread upward pressure on prices: resulting inflation is expected to reach 5.7 percent in advanced economies and 8.7% in emerging and developing countries, 1.8% and 2.8% respectively. higher than forecast in January wrote the IMF report. † Never before have so many countries experienced this severe recession at the same time; with loss of capital, jobs, livelihoods and livelihoods. A 1% increase in food prices could put 10 million people in extreme poverty added Malpass.
† The world is in the stage of stagflation. The problem is that to remedy this, most policies prefer to curb inflation. What will be an impact on workforce, employment and productivity; as well as the standard of living Soliman sums up. Mohamed Shadi, a macroeconomist at the Egyptian Center for Thought and Strategic Studies, explains that to address this situation, central banks and finance ministries are using unconventional monetary policy tools, such as encouraging savings, such as the 18% interest rate cut. certificate issued by Egyptian public banks the day after the debit.