Sushma Ramachandran

The good news is that fears of a recession in Europe are fading away. Green shoots of growth in the British corporate sector have been recorded after a gap of seven months while the Eurozone saw growth touch a nine-month high in February. These are encouraging reports at a time when the global economy is forecast to slow down to 2.9 percent in 2023 from 3.4 percent last year.

Much of the sluggishness is attributed to the recessionary trends in developed economies like the U.S., the U.K., and the European Union. The Managing Director of the International Monetary Fund, Kristalina Georgieva has declared that emerging markets and developing economies are expected to account for about 80 percent of global growth this year. India alone is expected to contribute about 15 percent.

Yet the positive impact of an economic recovery in the developed world cannot be overstated right now. In case the latest trends continue, global growth is likely to be much higher than the 3.1 percent currently forecast for 2024. In the case of the U.K., a composite reading of private sector output in a survey of purchasing managers from S&P Global rose to 53 in February, much higher than the expected level of 49. This is significant since any reading above 50 indicates economic growth. At the same time, it also showed a sustained increase in prices, indicating that the Bank of England would have to continue monetary tightening to bring inflation down to manageable levels.

Similar data for the Eurozone from the survey showed the indicator at 53.2 in February compared to 50.8 in January. In other words, growth has finally resumed in the region after the pandemic and despite the continuation of the Ukraine conflict.

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This upbeat news comes even as the G20 Finance Ministers and central bank chiefs are set to discuss issues related to the mounting debt in developing and poor countries at a meeting in Bengaluru. According to the IMF data about 60 percent of low-income countries are facing debt distress. This is twice the number that was in the same crisis in 2015. Already countries in the South Asian region like Sri Lanka, Pakistan, and Bangladesh have sought IMF loans to rescue them from their financial emergencies.