Home Business World Bank forecasts Nigeria’s growth to resume at 1.8% in 2021

World Bank forecasts Nigeria’s growth to resume at 1.8% in 2021

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Photo Credit: Photo of Lagos by ©Dayo Adedayo, photo documentarian.

By Audrey Lotechukwu

TUE 08 JUNE, 2021-theGBJournal-Growth in Nigeria is expected to resume at 1.8% in 2021 and edge up to 2.1% next year, assuming higher oil prices, structural oil sector reforms, and market-based flexible exchange rate management, says the World Bank in its latest assessment of global economy amid receding COVID-19 pandemic.

The latest forecast underscores Nigeria’s GDP bounce for the second consecutive quarter in Q1 2021, recording 0.51% y-on-y growth in Q1 2021 and follows earlier more subdued forecast of 1.1% in January amid COVID-19 induced recession.

The World Bank noted that Growth in sub-Sahara Africa,(including Nigeria) has gradually resumed this year, reflecting positive spillovers from strengthening global economic activity, including higher oil and metal prices, and some progress in containing COVID-19, especially in Western and Central Africa.

‘’ Activity in the three largest economies—Angola, Nigeria, and South Africa—has partially recovered, the World said.

In some countries (Angola, 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. Foreign direct investments in the region have been resilient, recouping about ninetenths of their pre-pandemic levels, and workers’ remittances to the region have held up better than expected.

According to the bank, sub-Sahara Africa growth is forecast to resume to 2.8% this year and firm to 3.3% 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 4% 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% below its size in 2019.

Elsewhere in the region, growth in industrial commodity exporters excluding Angola, Nigeria and South Africa is expected to pick up to 2.4 percent in 2021-22. In agricultural commodity exporters, growth is forecast to resume at a faster pace of 4.5% a year on average in 2021-22.

‘’Risks are to the downside,’’ the Bank said.

‘’While some countries (Ghana, Nigeria, South Africa) are upgrading national vaccine distribution systems, procurement and logistical hurdles in many other countries could further slow vaccinations. An oil price drop could dent revenues for some oil exporters. Food insecurity remains a key risk as food prices have risen by more than 20 percent early this year in Angola, Ethiopia and Nigeria. Flood and drought could also destroy crops, exacerbate food price inflation, and further weigh on household consumption.

Rising conflicts could weaken recoveries. A sudden rise in sovereign borrowing costs could instigate financial pressures in some countries and high debt burdens and fiscal pressures could become more acute. At the same time, the pace of vaccinations could surpass expectations, restoring consumer and business confidence and strengthening the recovery. A stronger-than-expected rally in metal and oil prices could boost revenues.’’   

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