Nigeria’s economy to grow by 2.1 percent – World Bank

World Bank
World Bank

Nigeria’s economy will grow by 2.1 per cent for three consecutive years covering 2020, 2021 and 2023, the World Bank has predicted.

The report which also showed that Kenya would record six per cent growth during the same period; puts global economic growth at 2.5 per cent.

The predictions are contained in World Bank’s January 2020 Global Economic Prospects released on Wednesday.

The report, however, described the country’s macroeconomic framework as not “conducive to confidence.”

According to the Bretton Woods Institution, the macroeconomic framework is characterised by multiple exchange rates, foreign exchange restrictions and persistent inflation.

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For sub-Saharan Africa, regional growth is expected to peak at 2.9 per cent in 2020, assuming investor confidence improves in some large economies, energy bottlenecks ease, a pickup in oil production contributes to recovery in oil exporters and robust growth continues among agricultural commodity exporters.

The forecast is weaker than previously expected reflecting softer demand from key trading partners, lower commodity prices, and adverse domestic developments in several countries.

The bank pegged global economic growth at 2.5 per cent in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist.

It said growth among advanced economies as a group is anticipated to slip to 1.4 per cent in 2020 in part due to continued softness in manufacturing while growth in emerging markets and developing economies is expected to accelerate this year to 4.1 per cent.

World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu, advised that with growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction.

”Steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth,” Pazarbasioglu said.

World Bank Prospects Group Director Ayhan Kose, said low global interest rates provide only a precarious protection against financial crises,”

“The history of past waves of debt accumulation shows that these waves tend to have unhappy endings. In a fragile global environment, policy improvements are critical to minimize the risks associated with the current debt wave,” Kose added.

According to the report, in South Africa, growth is expected to pick up to 0.9 per cent, assuming the new administration’s reform agenda gathers pace, policy uncertainty wanes, and investment gradually recovers.

Growth in Angola is anticipated to accelerate to 1.5 per cent, assuming that ongoing reforms provide greater macroeconomic stability, improve the business environment, and bolster private investment.

In the West African Economic and Monetary Union, growth is expected to hold steady at 6.4 per cent.

In Kenya, growth is seen edging up to six per cent.

The report said economic recovery in Sub-Saharan Africa lost momentum, with growth in 2019 estimated to have moderated to 2.4 per cent. Intensifying global headwinds such as decelerating activity in major trading partners, elevated policy uncertainty, and falling commodity prices, have been compounded by domestic fragilities in several countries.

“In Angola, Nigeria, and South Africa — the three largest economies in the region — growth was subdued in 2019, remaining well below historical averages and contracting for a fifth consecutive year on a per capita basis,” it said.

Regional growth is expected to pick up to 2.9 per cent in 2020, assuming investor confidence improves in some large economies, energy bottlenecks ease, a pickup in oil production contributes to recovery in oil exporters and robust growth continues among agricultural commodity exporters.

In the West African Economic and Monetary Union, growth is expected to hold steady at 6.4 per cent.

Among the region’s exporters of agricultural commodities, sustained strong public infrastructure spending, combined with increased private sector activity in Madagascar, Rwanda, Uganda, or continued reforms to raise the productivity and competitiveness of export-oriented sectors, such as in Burkina Faso and Côte d’Ivoire, will continue to support output. In Kenya, growth is seen edging up to six per cent.

The World Bank said a sharper-than-expected deceleration in major trading partners such as China, the Euro Area, or the United States, would substantially lower export revenues and investment. A faster-than-expected slowdown in China would cause a sharp fall in commodity prices and, given Sub-Saharan Africa’s heavy reliance on extractive sectors for export and fiscal revenues, weigh heavily on regional activity.

A broad-based rise in government debt has led to sharp increases in interest burdens, crowding out non- interest expenditure and raising concerns about debt sustainability. Insecurity, conflicts, and insurgencies— particularly in the Sahel—would weigh on economic activity and food security in several economies.

Also, extreme weather events are becoming more frequent as climate changes, posing a significant downside risk to activity due to the disproportionate role played by agriculture in many economies in the region.

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