2023: A Growing Inequality 2022 was a year of uncertainty and 2023 is the year of inequality.

Mohammed Arifeen

2022 was a year of uncertainty and 2023 is the year of inequality. For countries hoping to bounce back from the devastating losses of the COVID-19 pandemic, the battle has been made tougher by the compounding threats of climate change, fragility, conflict and violence, or food insecurity, to name a few that make it difficult for economies across the board to fully recover. As with most crises, it’s the world’s poorest countries that are getting hit the hardest. Many of these countries, already in debt distress, find themselves even more squeezed for resources. Online activity work is a vital aspect of the labor market and a source of income but only for those who can access it. And let’s not forget today’s refugee crisis. Better migration policies can not only help improve the crisis as they can also help boost economic growth and prosperity. These policies have made development work harder. How will the World Bank responds to and manages new and existing menace is ever more critical. The 2023 World Bank Group-IMF Annual Meetings were a turning point for the Bank Group in particular, as its President Ajay Banga unveiled a new mission and vision for the organization: to create a world free of poverty on a livable planet.? As we end the year shifting? focus to our new mission and vision and how we can best address the concerns facing people, planet, prosperity, digital, and infrastructure, let's look back and see how we fared in addressing some of our most pressing development concerns and priorities.

?Greater poverty in middle-income countries has decreased, poverty in the poorest countries and countries affected by fragility, conflict, or violence is still worse than before the pandemic. The persistence of poverty in these countries makes other key global development goals much harder to achieve. The World Bank’s yearly International Debt Report (IDR), formerly International Debt Statistics (IDS), is celebrating fifty years of being the most comprehensive and transparent source of external debt data and analysis for the 121 low- and middle-income countries that report to the World Bank Debt Reporting System (DRS).?

?Last year’s IDR highlighted rising debt-related risks for all developing economies low as well as middle-income economies but the strain was increasing for the world’s poorest countries, which were squeezed by surging debt service payments. The pressure continues this year. According to this year’s IDR, developing countries spent a record $443.5 billion to service their external public and publicly guaranteed debt in 2022. The poorest countries eligible to borrow from the World Bank’s International Development Association (IDA) paid a record $88.9 billion in debt-servicing costs in 2022, 4.8 percent more than in 2021. The worlds’ poorest face the risk of debt crises as borrowing costs accelerate. The increase in costs shifted scarce resources away from critical needs such as health, education, and the environment. The World Bank’s yearly International Debt Report (IDR), formerly International Debt Statistics (IDS), is celebrating fifty years of being the most comprehensive and transparent source of external debt data and analysis for the 121 low- and middle-income countries that report to the World Bank Debt Reporting System.?

?Last year’s IDR pointed out rising debt-related risks for all developing economies—low as well as middle-income economies but the strain was intensifying for the world’s poorest countries, which were squeezed by huge debt service payments. The pressure continues this year.? This year’s IDR, developing countries spent a record $443.5 billion to service their external public and publicly guaranteed debt in 2022. The poorest countries eligible to borrow from the World Bank’s International Development Association (IDA) paid a record $88.9 billion in debt-servicing costs in 2022, 4.8 percent more than in 2021. The world’s poorest face the risk of debt crises as borrowing costs increase. The increase in costs shifted scarce resources away from critical needs such as health, education, and the environment. Over the last decade, external debt has been steadily increasing across all regions.

Climate change leaves no person and no economy unharmed. It could drive 216 million people to migrate within their own countries by 2050. It could increase water stress and cut crop yields, especially in the world’s most food-insecure regions. Agrifood systems are also responsible for one third of all emissions. Scaling up renewable and energy efficiency, and investing in electrification at scale, while avoiding new coal plant construction and retiring old ones, is critical to providing clean energy to power homes, schools, hospitals, and businesses. Reducing emissions and boosting resilience is possible, but will require substantial social, economic, and technological changes. This month during COP28 in Dubai, the World Bank announced bold actions to increase climate financing, broaden the scope of climate resilient debt clauses, increased efforts on carbon markets, and to "decisively bend the methane emissions curve,” and much more.?

? In a world the world’s poorest face the hard of shocks, climate change is no different. ?Solving it is at the heart of the development challenge and of building a livable planet. According to the latest Commodity Markets Outlook report, an escalation of the current conflict in the Middle East coming on top of disruptions caused by the Russian invasion of Ukraine could push global commodity markets into uncharted waters. Global commodity prices declined by almost 25 percent in 2023 relative to 2022, the sharpest drop since the pandemic. The start of the conflict in the Middle East in early October led to an initial growth in prices, though the impact so far has been small.? Prices of most commodities remain above their 2015-19 average. Oil prices are expected to average $90 a barrel in the current quarter before declining to an average of $81 a barrel next year as global economic growth slows, and overall commodity prices are projected to fall 4.1% next year. Prices of agricultural commodities are expected to decline next year as supplies rise, and prices of base metals are also projected to drop 5% in 2024. Commodity prices are expected to stabilize in 2022. Migration is one of our serious development problems. About 184 million people about 2.3 percent of the world’s population—live outside of their country of nationality, and almost half of them are in low- and middle-income countries.

The World Development Report 2023 finds that better migration policies can help activate prosperity in all countries. According to this year’s report, as populations’ age at an unprecedented pace across the globe, countries are increasingly reliant on migration for long-term growth potential. We can use this as an opportunity to find better ways to make migration work for people and societies.

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