World Bank raises Nigeria’s GDP growth projection to 1.8%

The World Bank has increased Nigeria’s Gross Domestic Product growth forecast for 2021 to 1.8 per cent, which is higher by 0.7 per cent than its initial projection earlier this year.

The bank, in its June 2021 Global Economic Prospect just released, also forecast the GDP growth to hit 2.1 per cent for the country in 2022, compared with the 1.8 per cent it had predicted for Nigeria in the earlier report released in January.

Nigeria recorded a GDP growth rate of 0.51 per cent (year-on-year) in the first quarter of 2021, (Q1 2021) compared with the 0.11 per cent recorded in the fourth quarter (Q4) 2020, according to figures the National Bureau of Statistics released last month.

But the World Bank said its positive prediction for Nigeria was based on the expectation that crude oil prices would remain high as well as the government effecting structural reforms and flexible exchange rate management.

It said, “Growth in Nigeria is expected to resume at 1.8 per cent in 2021 and edge up to 2.1 per cent next year, assuming higher oil prices, structural oil sector reforms, and market-based flexible exchange rate management.”

The report stated that output in sub-Saharan Africa shrank at an estimated 2.4 per cent in 2020 as a result of the COVID-19 pandemic, a milder-than-expected recession.

It added that growth in the region has gradually resumed this year, which it stated was a reflection of positive spillover from strengthening global economic activity, including higher oil and metal prices, and some progress in containing COVID-19, especially in Western and Central Africa.

“The pandemic has contributed to wider budget deficits and a spike in government debt, heightening the risk of debt distress in some countries. Activity in the three largest economies—Angola, Nigeria, and South Africa— has partially recovered.

“Many industrial and agricultural commodity exporting countries experienced deep contractions last year. In tourism reliant countries, international arrivals have been at a near-halt, and tourism is likely to remain slow until wider vaccination permits safe reopening to international travel.

 

“Despite improvement, COVID-19 has continued to have adverse impacts on health, schooling, investment, and economic growth,” it stated.

According to the report, in some countries such as Angola and Nigeria, accommodative monetary and fiscal policies, currency depreciations, and rising food and energy prices “have stoked inflation.”

“Elsewhere (Kenya, South Africa), subdued demand has kept inflation in check,” it added.

The report noted that foreign direct investments in the region had been resilient, recouping about nine-tenths of their pre-pandemic levels, and workers’ remittances to the region have held up better than expected.

“Growth is forecast to resume to 2.8 per cent this year and firm to 3.3 per cent in 2022, underpinned by stronger external demand, mainly from China and the United States, higher commodity prices, and containment of COVID-19.

“Procurement and logistical challenges are expected to continue hobble the pace of vaccination despite the provision of vaccines by COVAX. Policy uncertainty and the lingering effects of the pandemic are expected to delay major investments in infrastructure and extractives and to weigh on the recovery (Central African Republic, Equatorial Guinea, Niger, Kenya).

“Per capita income levels in 2022 are expected to be four per cent lower on average than in 2019. Conditions in the region’s fragile and conflict-affected countries are expected to be particularly challenging; their average output level in 2022 is forecast to be 5.3 per cent below its size in 2019,” it said.

World Bank Group President, Mr David Malpass, said, “While there are welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world.”