Africa & World Economy

How the Pandemic Widened Global Current Account Balances

By Abdulazeez KurangaPosted on August 3, 2021Posted in Africa & World EconomyTagged BOP, Consumption, Current Account, External Sector, GDP, Pandemic, TradeNo Comments

2020 was a year of extremes. Travel all but ceased for a period. Oil prices wildly fluctuated. Trade in medical products reached new heights. Household spending shifted to consumer goods rather than services and savings ballooned as people stayed home amid a global shutdown.

In our latest External Sector Report we found that the global reaction to the pandemic further widened global current account balances—the sum of absolute deficits and surpluses among all countries—from 2.8 percent of world GDP in 2019 to 3.2 percent of GDP in 2020. Those balances are set to widen further as the pandemic continues to rage in much of the world.

Drawing Further Apart: Widening Gaps in the Global Recovery

By Abdulazeez KurangaPosted on July 28, 2021Posted in Africa & World EconomyTagged COVID-19, Growth, IMF, Nigeria, Outlook, United States, Vaccines, WEONo Comments

The global economic recovery continues, but with a widening gap between advanced economies and many emerging market and developing economies. Our latest global growth forecast of 6 percent for 2021 is unchanged from the previous outlook, but the composition has changed.

Growth prospects for advanced economies this year have improved by 0.5 percentage point, but this is offset exactly by a downward revision for emerging market and developing economies driven by a significant downgrade for emerging Asia. For 2022, we project global growth of 4.9 percent, up from our previous forecast of 4.4 percent. But again, underlying this is a sizeable upgrade for advanced economies, and a more modest one for emerging market and developing economies.

Sub-Saharan Africa: We need to act now

By Adebisi SamuelPosted on June 29, 2021Posted in Africa & World Economy, AgenciesTagged Africa, COVID-19, Debt, GDP, Namibia, Pandemic, SSANo Comments

The growth of infections in sub-Saharan Africa is now the fastest in the world, with an explosive trajectory that is outpacing the record set in the second wave. At this pace, this new wave will likely surpass previous peaks in a matter of days—and in some countries, infections are already more than double, or even triple, their January peaks. The latest (delta) variant—reportedly 60 percent more transmissible than earlier variants—has been detected in 14 countries.

How “Chaos” In the Shipping Industry Is Choking The Economy

By Joshua OlorunsaiyePosted on June 16, 2021Posted in Africa & World EconomyTagged Economy, Sea, Shipping, United States, WorldNo Comments

On both land and at sea, the entire supply chain is struggling to keep up. In the Pacific Northwest, it’s become such a clusterfest that the U.S. Coast Guard has been redirecting boats to anchor off the coast of Whidbey Island and other places they typically don’t park. Ship crews are having to wait days, even weeks, for the chance to dock at the ports and offload their precious goods.

How to Attract Private Finance to Africa’s Development

By Abdulazeez KurangaPosted on June 15, 2021Posted in Africa & World EconomyTagged Africa, Finance, IMF, investment, NigeriaNo Comments

High public debt levels and the uncertain outlook for international aid limit the scope for growth through large public investment programs. The private sector will have to play more of a role in economic development if countries are to enjoy a strong recovery and avoid economic stagnation. Heads of state from Africa made this one of their resounding messages during the recent summit on “Financing African Economies” held in Paris in May.

A Proposal to End the COVID-19 Pandemic

By Abdulazeez KurangaPosted on May 21, 2021Posted in Africa & World Economy, AgenciesTagged COVAX, COVID-19, GAVI, investment, Pandemic, Supply, Vaccine, WHO, World BankNo Comments

Many countries have stepped up in the global fight against the pandemic, as have institutions such as the World Health Organization, the World Bank, Gavi (the Global Alliance for Vaccines and Immunization), the African Union, and others.

Yet, more than a year into the COVID-19 crisis, new cases worldwide are higher than ever. Urgent action is needed to arrest the rising human toll and economic strain.

US Dollar Share of Global Foreign Exchange Reserves Drops to 25-Year Low

By Joshua OlorunsaiyePosted on May 15, 2021Posted in Africa & World Economy, AgenciesTagged Central Banks, Currencies, Exchange Rate, Foreign Exchange Reserves, US DollarNo Comments

The share of US dollar reserves held by central banks fell to 59 percent—its lowest level in 25 years—during the fourth quarter of 2020, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) survey. Some analysts say this partly reflects the declining role of the US dollar in the global economy, in the face of competition from other currencies used by central banks for international transactions. If the shifts in central bank reserves are large enough, they can affect currency and bond markets.

The Policymaker’s Trilemma

By Aminu MusaPosted on May 14, 2021Posted in Africa & World EconomyTagged Africa, Debt, GDP, Inflation, Pandemic, Revenue, TaxesNo Comments

Imagine you’re a policymaker in sub-Saharan Africa. You’ve been charged with lifting your country out of the worst health crisis in living memory, and nobody around you knows when it will end—the second wave that gripped the region earlier in the year has eased, but many countries are nonetheless bracing for further waves as winter approaches.

One piece of good news is that a global recovery is well underway. Key economies are rebounding sharply, global trade has improved, commodity prices are higher, and investment flows have resumed.

The bad news is that, for sub-Saharan Africa, at least, near-term growth prospects are somewhat more subdued. And as long as widespread vaccination remains out of reach, you will face the unenviable task of trying to boost your economy while simultaneously dealing with repeated COVID-19 outbreaks as they arise.

Why Soaring Stocks Could Be Bad News For The Economy

By Abdulazeez KurangaPosted on May 12, 2021Posted in Africa & World EconomyTagged Bond, Boom, Economy, Equities, Fixed Income, GDP, Growth, Inflation, StocksNo Comments

While it’s had some ups and downs, the stock market has soared to historic heights in recent years. For many, that’s great news: it’s a sign that the economy and their retirement accounts are doing really well. For Jan Eeckhout, however, the booming stock market is a sign that there’s something deeply wrong with the economy.

Sure, the economist says, he has a retirement account with stocks, and he personally benefits from the ongoing bonanza on stock exchanges. But the rocket ride of the stock market is powered by the exploding profits of increasingly powerful corporations. Their increasingly ridiculous profits, he says, are eating the income of the vast bulk of workers and hurting the overall economy. That notion is the central thesis of his forthcoming book, The Profit Paradox: How Thriving Firms Threaten the Future of Work.

104 days of Bidenonomics

By Adebisi SamuelPosted on May 4, 2021Posted in Africa & World EconomyTagged America, Biden, Economy, Fiscal Policy, Inflation, jobs, StimulusNo Comments

President Biden has now been in office for 100 days. Okay, technically 104 days. In that time, presidential tweets have gotten way more boring, but the federal government’s plans to intervene in the economy have gotten way more interesting.

In his joint address to Congress last week, Biden called for a multitrillion-dollar agenda that could fundamentally transform the economy. And it now seems like the man conservatives called “Sleepy Joe” has been pounding Red Bulls and is ready to tax and spend like no president in generations.

Here’s a brief overview of some of President Biden’s biggest economic initiatives.