Numerous macroeconomic problems that the global economy is now dealing with might have a long-term impact on how the globe develops. One of these problems is the increase in inequality, which has been a serious problem in many regions of the world since the early 2000s. Inequality may cause social discontent and political instability in addition to affecting people’s economic chances. Only 26 billionaires, or 1% of the world’s population, are estimated to hold more money than 90% of all people combined, or 3.8 billion people, according to Oxfam.
The consequences of climate change on economies worldwide are another problem. The global economy will be directly impacted by the major effects that climate change will have on water availability, health, and food security. According to estimates, by 2023, the economic output lost because of extreme weather conditions including floods and droughts might total up to $69 trillion.
Rapid technical progress is the third problem that the world economy is now confronting. While technology has been a fantastic growth engine in many parts of the world, it also presents difficulties for individuals who lack access to or are unable to use new technologies well. Inequality across nations and within societies may increase because of the digital divide as those with access benefit more than those without.
Trade conflicts and protectionism are lastly another significant macroeconomic concern affecting the world economy. Large-scale trade conflicts have recently erupted between nations like the US and China, leading to higher tariffs and other protectionist policies that might disrupt global supply chains and have a detrimental impact on economic development.
These are just a handful of the macroeconomic problems the global economy will be dealing with in 2023. It is crucial for governments to act now to make sure that their economies are ready for whatever comes next as they struggle with these issues on a global scale.
Nigerian Economy
The economy is being impacted by Nigeria’s currency reform.
The new redesign of Nigeria’s currency is having a significant effect on the economy of the nation. To decrease currency fraud and increase trust in the naira, the Central Bank of Nigeria (CBN) announced plans to issue new denominations of naira notes in 2022. The new notes were put into circulation by the CBN earlier this year, replacing all previous denominations. For companies throughout Nigeria, the introduction of these new denominations has had a significant impact.
To begin with, it has complicated transactions since it is unclear which notes are still valid due to the inability of the government to educate citizens in the rural areas about the new currency reform. As people try to exchange their old currency for recently released notes, this has caused delays at banks and uproar from the citizens of the country because they cannot access their money and a limit being placed upon the amount they can withdraw from their account. The cost of new ATMs, point-of-sale systems, and other equipment that is compatible with the new notes has also increased for companies.
Increased manufacturing costs brought on by the redesign of Nigeria’s currency have increased prices for products and services, which has contributed to an increase in inflation. As a result, many Nigerians are struggling to make ends meet in an already difficult economic environment. Overall, it is evident that Nigeria’s choice to restructure its currency would have significant short- and long-term effects on the country’s economy.
Businesses and people are still getting used to the changes, despite the CBN’s expectations that this action will assist curb counterfeiting and increase trust in the naira. Therefore, it is uncertain if this decision would have a favourable or unfavourable effect on Nigeria’s economy in the next years.
African Economy
Difficulties with the Republic of Congo’s economy
The Republic of Congo will experience a lot of macroeconomic difficulties in 2023. The nation is now coping with a continuous budget deficit as well as an inflation rate that is high at 10%. Weak governmental finances, low oil prices, and declining tax receipts are to blame for this. The Republic of Congo furthermore has difficulties with a lack of international investment because of political unrest and corruption.
Due to poor monetary policy management and capital flight out of the country, the value of the nation’s currency has also decreased dramatically since 2016. Citizens’ buying power is still being eroded by inflation, and the unemployment rate is still high at about 8%. Through economic reforms including lowering the budget deficit and enacting fiscal austerity measures, the government is seeking to address some of these issues.
It also tries to entice foreign investment by providing tax breaks and enhancing contract transparency in the public sector. The nation’s economy is still unstable, nevertheless, because of its reliance on volatile oil exports. The government has tried to diversify its economy, but these efforts have been impeded by inadequate infrastructure, a lack of small-business financing, and shoddy governance systems. If the Republic of Congo is to overcome these obstacles during the next years, it will require substantial foreign assistance. This includes technical aid in areas like tax reform and anti-corruption activities, as well as help with building infrastructure, generating jobs, and enabling access to financial services.
The Republic of Congo will undoubtedly encounter several serious macroeconomic difficulties in 2023. If the government wants to foster an atmosphere that supports economic development and stability, it must take action to solve these issues.
Eniola Ojo
Junior Associate
