The projected global growth rate for 2023 has been revised down to 2.1 per cent, with EMDEs, excluding China, expected to experience a slowdown to 2.9 per cent . These downward revisions affect a majority of EMDEs and advanced economies, raising concerns about poverty reduction and job creation.
Per capita incomes in more than a third of low-income countries will still be below 2019 levels in 2024, exacerbating extreme poverty. Developing economies, burdened by weak growth, high inflation, and record debt levels, are facing numerous challenges. There is a pressing need for timely action by policymakers to prevent financial contagion and mitigate domestic vulnerabilities.
The report highlights the adverse financial effects of U.S. interest rate increases on EMDEs, particularly countries with greater economic vulnerabilities. Frontier markets, characterized by less developed financial markets and limited access to international capital, face significant increases in borrowing costs.
With public debt averaging around 70 per cent of GDP and limited government revenues, interest payments are consuming a larger share of resources. Fourteen low-income countries are already in or at high risk of debt distress.
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