Policymakers, government officials, central bank governors, corporate bigwigs and top banking and financial executives have descended on Marrakesh to attend the World Bank and International Monetary Fund’s 2023 Annual Meetings.
The gathering of global thought leaders in the Moroccan city could not be more significant as global economic growth momentum wanes.
The world economy is facing stiff headwinds from geopolitical shocks, unabating inflationary pressures and central banks’ bid to keep interest rates at elevated levels to stabilise consumer prices.
At the first annual meeting in Africa in about five decades, policymakers, together with the IMF and World Bank, will try to find solutions for how to better support debt-laden emerging and development markets, mobilise finance for climate change mitigation, draw growth strategies for the African continent and most of all, how to best steer the global economy shaken by a spate of geopolitical conflicts.
The global economy is still reeling from the reverberations of the Russia’s assault on Ukraine last year.
The war in Eastern Europe severely disrupted the energy market supply chain, sending prices of Brent soaring to nearly $140 per barrel last year, which hampered the recovery from the coronavirus pandemic-driven slowdown.
The energy shocks also roiled financial markets and sent some of Europe’s energy-dependent economies into contraction mode.
While Europe struggled with energy crisis, nations dependant on food imports, mostly in the Mena region, fought to control the commodity-driven inflation.
While the world is still grappling with the Russia-Ukraine conflict, military clashes between Israel and Hamas broke out this week, giving rise to political uncertainty in the Mena region.
The ruling Hamas group in the Gaza Strip launched the largest military assault on Israel in decades on Saturday, firing thousands of rockets as dozens of fighters infiltrated the heavily fortified border.
Israel responded by launching a barrage of air strikes on the besieged Gaza Strip.
The combined death toll from the Hamas attack on southern Israel and Israel’s assault on the Gaza Strip has climbed to more than 1,100 as of Monday.
The latest conflict sent oil prices higher, rising about 4 per cent on Monday, with Brent, the benchmark for two thirds of the world’s oil, trading 3.76 per cent higher at $87.76 during early trade. West Texas Intermediate, the gauge that tracks US crude, rose by 4.08 per cent to $86.17 a barrel.
Stocks on regional bourse also suffered as the geopolitical uncertainty escalated and Israeli Prime Minister Benjamin Netanyahu spoke of a “long war”.
The IMF in April said that rising geopolitical tensions and geoeconomic fragmentation are posing serious threats to global financial stability, redirecting cross-border investments and hitting emerging markets the most.
The shock of the latest escalation between Israel and Hamas is likely to hit economic momentum in the Mena region, where growth is expected to slow significantly this year.
The World Bank expects Mena economic expansion to decline to 1.9 per cent this year from 6 per cent in 2022, due to the cap on crude production and stiff global economic headwinds.
The latest forecast is lower than the Washington-based lender’s 3 per cent Mena growth projection released in April.
As policymakers and thought leaders from the public and private sectors meet this week in Morocco, the latest geopolitical tensions will add to an already longlist of issues and challenges facing the global economy.
