The shocks of the past three years have hit all countries, but they have hit emerging and developing countries particularly hard. As a result, according to Global Economic Prospects 2023, just out from the World Bank, the convergence of average incomes between poor and rich countries has stalled. Worse, it might not soon return, given the damage already done and likely to persist in the years ahead.

By the end of 2024, gross domestic product levels in emerging and developing economies are forecast to be 6 per cent below those expected before the pandemic. The cumulative loss in GDP of these countries between 2020 and 2024 is forecast at 30 per cent of 2019 GDP. In fragile and conflict-affected areas, real incomes per head are expected to have fallen outright by 2024. If the global economy slows more than is now forecast, as a result of tight monetary policy and perhaps other shocks, these outcomes could easily be worse.

These losses, with all they mean for the plight of the world’s most vulnerable people, show the impact of the pandemic, the war in Ukraine, the rise in energy and food prices, the surge in inflation and the sharp tightening of monetary policy in high-income countries, especially the US, and consequent rise in the value of the dollar. An obvious danger now is that of waves of defaults in over-indebted developing countries. Taken together, these shocks will cause long-lasting effects, perhaps lost decades, in many vulnerable places.