All signs are pointing to hard times ahead; a global economic storm is in the OFFING, and a worldwide recession is INEVITABLE.
Here is why.
The global economy is currently in a fragile state. War in Ukraine, Climate change, and pandemics are major contributing factors.
In June, the World Bank sounded the warning bell; it warns of a possible return to 1970s stagflation, saying that most countries’ economies may plunge into a recession.
The world bank’s president, David Malpass said many countries will find it hard to evade recession.
As a result, the world bank went ahead to lower its overall growth projection for 2022 to 2.9%.
Currently, the world’s largest economy, the U.S. economy is experiencing major challenges, for instance, the Federal Reserve is fighting to curb inflation.
Last month, the Fed chairperson raised the interest rate to a nearly 8% high to slow down rising inflation.
Unfortunately, a high-interest rate has its setbacks, it leads to low business activities and an overall slowdown in economic activities leading to low investments and consequently job layoffs. Because businesses are not profitable due to low economic activities.
So far, economists, there are warning of a recession, and in the US, some say the recession is already happening.
Here in South Sudan, you can see that frustration among South Sudanese on the streets or on the radio or in bars, in restaurants, and on public transport.
The common person is suffering because he or she has no options and the best they can do is to lament and point at decision-makers.
In South Sudan, fuel prices are at an all-time high, commodity prices are at an all-time high. For example, 50 kg maize flour is retailing at nearly 40,000 south Sudanese pounds, or $60 at a 643 SSP exchange rate on Thursday, July 209,2022
Prices of other basic commodities continue to rise.
This is happening as the Central bank is asserting efforts by consistently injecting the dollar into the market to normalize the exchange rate, but everything appears far away from everyone’s reach because of scarce dollars to balance the demand for hard currency for imports.
As a result, the pound continues losing to the dollar at a record rate.
At a time like this last year, South Sudanese was selling on an average of SSP 336 to a dollar. As of today, it is selling at SSP 660 per dollar.
This happens when people’s salary or net pay has not changed.
You can see how much people are suffering and finding it so hard to adjust
This is a clear indication that dollar auctioning as a measure of stability isn’t working in this context. Perhaps, the country’s bank leadership needs to review dollar auctioning as an exchange rate normalization strategy.
© Stephen Omiri, 2022
