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COVID-19, rising debt threatening Nigeria, other nations’ economic growth: World Bank

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The World Bank has warned that global economic growth will suffer a setback due to inflation, policy uncertainty, rising insecurity, and a spike in COVID-19 infections in Nigeria and other developing countries.

“The world economy is simultaneously facing COVID-19, inflation, and policy uncertainty, with government spending and monetary policies in uncharted territory,” the financial institution said.

In the World Bank Group’s latest report on Tuesday, its president, David Malpass, explained that “rising inequality and security challenges are particularly harmful to developing countries.”

By 2023, all advanced economies will have achieved a full output recovery, the report said, but output in emerging and developing economies will remain four per cent below its pre-pandemic trend.

“Putting more countries on a favourable growth path requires concerted international action and a comprehensive set of national policy responses,” it said.

While economic growth experienced a strong rebound in 2021, it is expected to decline markedly from 5.5 per cent last year to 4.1 per cent in 2022 and drop to 3.2 per cent in 2023.

Following a strong rebound in 2021, the global economy is now entering a slowdown amid threats from COVID-19 variants and a rise in inflation, debt, and income inequality—all adding to the risk of a “hard landing” in developing economies.

The slowdown will coincide with a widening divergence in growth rates between advanced and emerging or developing economies.

Mari Pangestu, the World Bank’s managing director for Development Policy and Partnerships, stressed the importance of multilateral collaboration as the choices policymakers make in the coming years would decide the course of the next decade.

“The immediate priority should be to ensure that vaccines are deployed more widely and equitably so the pandemic can be brought under control. But tackling reversals in development progress such as rising inequality will require sustained support,” she noted. “In a time of high debt, global cooperation will be essential to help expand the financial resources of developing economies so they can achieve green, resilient, and inclusive development.”