SESRIC




OIC Economic Outlook 2022
Date : 28 November 2022

SESRIC has launched the 2022 edition of the OIC Economic Outlook report during the 38th Ministerial Session of the COMCEC, which was held on 26-29 November 2022 in Istanbul, Republic of Türkiye. The main highlights of the report were presented by H.E. Mr. Nebil DABUR, the Director General of SESRIC.

This flagship report of SESRIC explores global macroeconomic trends with a focus on the OIC countries as a group and provides a wide range of useful statistics and analyses, including the comparison of OIC countries’ economic performance with the developed countries, the non-OIC developing countries, and the world average.

The current edition of the report highlights that most economic indicators improved in 2021 across the world, including the OIC countries because of the ongoing recovery from the COVID-19 pandemic. However, the global economic outlook is highly fragile and uncertain amid the Russia-Ukraine war, which is compounding the damage from the pandemic by exacerbating supply-side shocks, disrupting international commodity markets and driving inflation to unprecedented heights across the world. Thus, despite recording a noticeable recovery in 2021, the global economy remained mired in concerns about the resurgence of the pandemic and disruptions caused by the Russia-Ukraine war.

After a contraction of 3.1% in 2020, global economic growth is estimated at 6.1% in 2021 supported by a strong recovery in both developed countries (5.2%) and developing countries (6.8%). However, since the Russia-Ukraine conflict is anticipated to have a substantial impact on the post-pandemic global economic recovery, international organisations such as the IMF, World Bank, and OECD have revised down their forecasts for global economic growth for 2022 and 2023. Global economic growth for 2022 has been marked down to 3.2% in the July 2022 IMF projections, 1.2 percentage points lower than previously projected in January. Likewise, the projection for 2023 has been revised down by 0.9 percentage points to 2.9%. The OIC countries, which contracted by 1.7% under the pandemic conditions in 2020, grew by 5.8% in 2021 in parallel with the global economic recovery. However, their economic growth is expected to moderate in the next two years, to 4.9% in 2022 and 4.2% in 2023.

The resumption of economic activity in the second year of the pandemic has narrowed the shortfall in working hours relative to the pre-pandemic situation from 8.6% in 2020 to 3.9% in 2021. Thus, the corresponding loss of full-time equivalent (FTE) jobs declined from 250 million to 114 million. In the OIC countries, it is estimated that the pandemic caused a loss of 32.5 million FTE jobs in 2021, down 37% from 51.5 million in 2020. The global unemployment rate fell by 0.4 percentage points to 6.2% in 2021, after peaking at 6.6% in 2020, while the OIC countries witnessed an unemployment rate further rising to 7.2%.

As the pandemic related restrictions were relaxed throughout 2021, the demand accelerated but supply was slower to respond amid ongoing disruptions in the global supply chains. Consequently, average commodity prices increased by 53.2% from their lower levels in the previous year, and they are expected to rise further in 2022 amid escalating geopolitical tensions and the war in Ukraine. Global inflation rose to 4.7% in 2021 after slowing down to 3.2% in 2020. Considering that war-related supply shortages are expected to greatly intensify rising inflationary pressures, inflation is projected for 2022 at as high as 6.6% in developed countries and 9.5% in developing countries, averaging globally at 8.3%. Inflation in the OIC countries further increased to 12.9% in 2021 after a sharp rise to 9.4% in 2020. It is projected to further rise to a record high of 17.7% in 2022.

Emphasising the growing trend of geopolitical risks and threat of conflicts as well as the challenges associated with climate change, the current edition of the report includes a special section titled “Achieving Sustainable and Resilient Recovery Post COVID-19 Pandemic”. This special section highlights a number of policy measures for strengthening economic resilience to future shocks under eight broad categories. Although these recommendations are not exhaustive and all-encompassing, they do provide possible directions in addressing economy-level vulnerabilities across the OIC countries.

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