World Bank marks down Nigeria’s growth projection to 2.8 per cent

The World Bank, in its June Global Economic Prospects, has marginally marked down Nigeria’s output growth for this year to 2.8 per cent on account of the slower speed seen in the first quarter.

The economy is expected to see faster growth of three per cent and 3.1 per cent in 2024 and 2025 respectively.
June’s 2.8 per cent projection is 0.1 percentage point lower than the earlier estimate and 0.3 per cent lower than the 3.1 per cent real growth expansion recorded last year.

The Bank said the country’s growth is in 2023 to 2024 is far slower than what is needed to make significant inroads into mitigating extreme poverty.

In the first quarter, the gross domestic product (GDP) experienced a squeeze on account of cash scarcity and finished at 2.3 per cent growth rate.

On average, sub-Saharan Africa (SSA) is projected to grow at 3.2 per cent in the year. The forecast is over one percentage point ahead of the global average (2.1 per cent).

The report noted that financing needs are projected to remain elevated, due to higher borrowing costs, lower oil production and prices and persistent fiscal and external pressures amid weak domestic revenue mobilisation.

“Growth in Nigeria, the region’s largest economy, eased further in early 2023 as a rebound in oil output remained constrained by persistent production challenges.

“The recovery in the non-oil sector, which propelled activity last year, lost momentum early this year amid persistently high inflation, foreign exchange shortages, and shortages of banknotes caused by currency redesign,” the report stated.

Over half of the 2023 SSA downgrade is attributable to an abrupt slowdown in South Africa. Downgrades are widespread across energy and metal producers as well as non-resource-rich countries.

“Excluding South Africa, growth in SSA is expected to slow from 4.2 per cent in 2022 to 3.9 per cent this year. While this represents a minor downgrade from January, this pace of expansion is still a full percentage point below the 2000-19 average,” the report said.

On the global forecast, the report noted: “Stronger-than-expected activity in early 2023 is projected to push average yearly growth 0.2 percentage point above the January forecast, despite an expected weakening in the second half.

“In contrast, the pickup in growth in 2024 is weaker than previously forecast, owing to the more delayed impact of monetary policy rate increases, as well as additional headwinds from tighter credit conditions.”