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Wednesday, March 29, 2023

World Bank Raises Nigeria’s Growth Projection to 2.4%

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The World Bank Group has raised its 2021 Gross Domestic Product (GDP) projection for Nigeria to 2.4 per cent, higher than the 1. 8 per cent it had estimated for the country.

The multilateral institution also declared that Sub-Saharan Africa was set to emerge from the 2020 recession sparked by the COVID-19 pandemic with growth expected to expand by 3.3 per cent in 2021.

In its twice-yearly economic update, ‘Pulse,’ the Washington-based institution noted that current speeds of economic recovery in the region was varied, with the three largest economies–Angola, Nigeria, and South Africa, expected to grow by 0.4 per cent, 2.4 per cent and 4.6 per cent respectively.

Excluding South Africa and Nigeria, the rest of Sub-Saharan was rebounding faster at a growth rate of 3.6 per cent in 2021, with non-resource-rich countries like Côte d’Ivoire and Kenya expected to recover strongly at 6.2 and 5.0 per cent, respectively, the report added.

Captioned, “Africa’s Pulse: Climate Change Adaptation and Economic Transformation in Sub-Saharan Africa,” the World Bank report observed that due to prudent monetary and fiscal policies, the region’s fiscal deficit, at 5.4 per cent of GDP in 2021, was expected to narrow to 4.5 per cent of GDP in 2022 and 3 per cent of GDP in 2023

According to the report, the rebound in the region was being fueled by elevated commodity prices, a relaxation of stringent pandemic measures, and recovery in global trade, but remains vulnerable given the low rates of vaccination on the continent, protracted economic damage, and a slow pace of recovery.

It stated that the growth for 2022 and 2023, would also remain just below four per cent, continuing to lag the recovery in advanced economies and emerging markets, and reflecting subdued investment in Sub-Saharan Africa.

The Chief Economist for Africa at the World Bank, Albert Zeufack explained: “Fair and broad access to effective and safe COVID 19 vaccines is key to saving lives and strengthening Africa’s economic recovery.

“Faster vaccine deployment would accelerate the region’s growth to 5.1 per cent in 2022 and 5.4 per cent in 2023—as more containment measures are lifted, boosting consumption and investment.”

A positive trend, the report noted, was that African countries have seized the opportunity of the crisis to foster structural and macroeconomic reforms, adding that several countries had embarked on difficult but necessary structural reforms, including the unification of exchange rates in Sudan, fuel subsidy reform in Nigeria, and the opening of the telecommunications sector to the private sector in Ethiopia.

“However fiscal discipline, combined with limited fiscal space, has prevented African countries from injecting the level of resources required to launch a vigorous policy response to COVID-19.

“Apart from mounting fiscal pressures and rising debt levels as they implement measures for a sustainable and inclusive economic recovery, Sub-Saharan African countries are also faced with worsening impacts of climate change,” the World Bank report said.

It advised that just as the countries used the crisis to introduce reform measures, they should also harness this opportunity to make sustainable, resilient transitions toward low-carbon economies that can provide long-term benefits in the form of reduced environmental hazards as well as new economic development openings

The report highlighted Africa’s unique context of low baseline development, pre-existing climate vulnerabilities, limited energy access, and high reliance on climate-sensitive sectors— as posing challenges but also providing opportunities to transform the economy and create jobs.

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