*The World Bank Group 2022 Global Economic Prospects (GEP) flagship report says effects of food insecurity on people’s ability to work at full capacity are a downside risk to growth, and acute challenge for consumers and households in the West African country

Isola Moses | ConsumerConnect

Against the backdrop of deteriorating security conditions in several parts of the country in recent times, the World Bank Group has cautioned that geopolitical tensions and violence could hinder growth by dampening consumer and business sentiment while discouraging  investments in Nigeria.

ConsumerConnect reports the global financial institution  in its World Bank Group 2022 Global Economic Prospects (GEP) flagship report released of recent noted the worsening security situations could generate instability in countries, as conflict cum violence in Nigeria could escalate.

The report said the effects of food insecurity on the ability of people to work at full capacity are a downside risk to growth in the near term, and an acute challenge for households.

The World Bank also stated that disruptions and damage resulting from natural disasters and weather-related events associated with climate change are an important short – and medium-term downside risk to growth for most regions, and a severe risk for the livelihoods of populations affected by these events.

The Bank said: “Geopolitical tensions and violence could hinder growth by dampening consumer and business sentiment and deterring investment.

“Deteriorating security conditions in Afghanistan, for instance, could generate instability in nearby countries, while conflict and violence in several countries in SSA (for example, Ethiopia, Mali, Nigeria, and Sudan) could escalate.”

The World Bank Group 2022 GEP reports further disclosed that per capita income in about 40 percent of Emerging Market and Developing Economies (EMDEs) is not expected to return to its 2019 level over the next two years—most notably in small, tourism-reliant economies.

The report also stated: “Gaps in per capita income relative to advanced economies are expected to widen in many EMDEs, especially in those facing fragile and conflict-affected situations, reversing progress made in previous years.

“The pandemic is estimated to have worsened inequality trends in all EMDE regions.”

According to the multinational institution, the EMDE per capita income growth is expected to weaken from an estimated 5.1 percent in 2021 to 3.4 percent on average in 2022 to 2023.

It is as well noted that excluding China, per capita income growth is set to slow from 3.8 percent in 2021 to 2.5 percent in 2023.

The deceleration partly reflects slow labour market recoveries, reduced policy support, and elevated inflation, including of food items, which is expected to erode real incomes. Even by 2023, output per capita is envisioned to be below its 2019 levels in about 40 percent of EMDEs, it said.

The Bank stated: “In particular, about half of fragile and conflict-affected EMDEs will not regain their pre-pandemic level of per capita income by the end of the forecast horizon. “The pandemic has also had a particularly pronounced impact on per capita income in small-island developing states reliant on tourism and, to a lesser extent, some oil-exporting EMDEs facing subdued prospects for extractive investment.”

More broadly, the pandemic has unwound decades of progress in narrowing the gap between EMDE per capita incomes and those of advanced economies, noted the report.

The World Bank further said in almost 70 percent of EMDEs, average per capita income growth over 2021-23 will lag the advanced-economy pace, with substantial ground lost in Low Income Countries, especially those in fragile and conflict-affected situations in uneven recovery in per capita incomes could return between-country income inequality to the levels of the early 2010s.

It as well said that the pace of global economic recovery is expected to slow in the near term as recurring pandemic waves disrupt domestic activity, supply bottlenecks continue, and policy support is gradually withdrawn.

Tha Bank noted: “At the same time, the recent emergence of the Omicron variant underscores how the further spread of COVID-19 and continued uneven access to vaccines could contribute to more persistence in the economic damage from the pandemic.

“The recovery is also at risk from more persistent supply disruptions, mounting inflationary pressures, financial stresses, climate-related disasters, and weaker-than- anticipated long-term growth drivers.”

The pace of global recovery has diminished from its strong pace in the second half of 2020, the Bank stated in the report.

The report said: “Recurring surges in the COVID-19 pandemic have sapped consumer demand, while continued supply bottlenecks and a tightening of EMDE financing conditions have also weighed on global activity. Growth in major economies, including the United States and China, has slowed, contributing to the headwinds facing many EMDEs.

“Global inflationary pressures have continued to build, in part reflecting rapid recoveries of demand, supply bottlenecks, and earlier increases in food and energy prices.”

The report also said: “After surging to an estimated 5.5 per cent in 2021, global growth is expected to slow markedly, to 4.1 percent in 2022 and 3.2 per cent in 2023, as the initial rebound in private consumption and investment fades and macroeconomic support is withdrawn.

The Bank also said: “These factors are expected to be only partly mitigated by the eventual removal of pandemic control measures, the drawdown of excess private savings, and rising real wages amid a steady tightening of labor markets.

“Investment, particularly in advanced economies, is projected to contribute appreciably to global growth throughout the forecast horizon.

“As demand softens, supply bottlenecks are also expected to dissipate. Much of the expected slowdown in global growth reflects a moderation in the contribution from major economies.”