Though it was not a full recovery from the aftershocks of the COVID-19 pandemic, the global economy was on the mend until the invasion of Ukraine by Russia. Economic prospects have worsened since then, exacerbating the divergence between the economic recoveries of advanced economies and those of the developing ones. The prevailing uncertainties in global growth prospects come in the aftermath of frequent disruptions to worldwide supply chains in the last two years with recurrent lockdowns in key manufacturing hubs, creating supply bottlenecks.
As a consequence of the current situation, two key macroeconomic variables have a persistent effect on growth rebound. First, there is a tenacious price pressure, leading to policy trade-offs especially in developing economies; and second, there have been capital outflows and a tightening of financial conditions, affecting investment and growth in the medium and long term.
