Stagnation bells are resounding globally, even as hunger is growing to a monster in African economies, Bismarck Rewane, Chief Executive Officer (CEO) of Financial Derivatives Company (FDC) Limited has warned.
Stagnation, which is about persistent high inflation combined with unemployment and stagnant demand has bedeviled world economies.
But, it appears the effect will be mostly felt in Africa where hunger has grown to become a monster.
“The world is facing an economic crunch. Sadly, it coincides with the persistent increase in food and energy prices. And the culprit, the Russian-Ukraine war that’s been ongoing for over six months shows no sign of ending soon”, said Rewane in FDC Bi-Monthly Economic Publication and Business Update.
He said, growth is declining sharply and there’s a 98.1 per cent chance that the world will slip into a recession in 2023. The International Monetary Fund (IMF) projects global growth to fall to 3.2 per cent from six per cent in 2021.
Also, worldwide inflation will peak at 8.8 per cent from 4.7 per cent in last year.
“Simply, we are in a new era of stagflation (high inflation and slow growth) and everyone is feeling the pinch”, said FDC.
The last time this happened was in the 1970s and it took years for the global economy to recover. Monetary policy tightening was the answer then, and it looks to be the only answer now.
“Many central banks (US Fed, BoE, ECB, and even the CBN) have increased rates by over 200bps this year.
