The World Bank has revised its growth projections for Nigeria, foreseeing a promising expansion of 3.3 per cent in 2024.
The bank in its Global Economic Prospects report for January 2024 also forecast that the country’s per capita income is set to return to its pre-pandemic levels by 2025, reflecting a resilient recovery from the challenges posed by the global health crisis.
According to the report, the Sub-Saharan African (SSA) region, which includes Nigeria, witnessed a deceleration in economic growth, estimated at 2.9 per cent in 2023.
This slowdown is attributed largely to country-specific challenges, with Nigeria facing issues such as elevated input prices for businesses.
Notably, three big economies in the region – Nigeria, South Africa, and Angola – collectively experienced a diminished growth rate, averaging 1.8 per cent in 2023.
The improved economic outlook is attributed to the gradual fruition of macro-fiscal reforms undertaken by the Nigerian government.
“Growth in Nigeria is projected at 3.3 per cent this year and 3.7 per cent in 2025—up 0.3 and 0.6 percentage points, respectively, since June—as macro-fiscal reforms gradually bear fruits.
“The baseline forecast implies that per capita income will reach its pre-pandemic level only in 2025,” it said.
Key sectors driving this growth include agriculture, construction, services, and trade, the report said.
The World Bank’s analysis points to these sectors as significant contributors to the overall economic expansion in the coming years.
Background
Over the past few years, there has been a notable escalation in food prices throughout Nigeria, exacerbated by the effects of government policies such as the removal of subsidies on petrol, among other factors.
Responding to the worsening food security situation, President Bola Tinubu declared a State of Emergency in July, aiming to address the surge in food prices and alleviate the challenges faced by the populace.
He also directed that “all matters pertaining to food & water availability and affordability, as essential livelihood items, be included within the purview of the National Security Council.”
Inflation
The World Bank report also showed an expected easing of inflationary pressures, linked to the impact of exchange rate reforms and the removal of fuel subsidies.
As these concerns gradually ease, inflation is predicted to stabilize.
“Inflation should gradually ease as the effects of last year’s exchange rate reforms and removal of fuel subsidies fade. These structural reforms are expected to boost fiscal revenue over the forecast period,” it said.
In November, Nigeria witnessed a surge in its annual inflation rate, reaching 28.20 per cent, as reported by the National Bureau of Statistics.
On a year-on-year basis, the headline inflation rate in November 2023 was notably higher by 6.73 percentage points compared to the rate recorded in November 2022, which stood at 21.47 per cent.
While acknowledging these projections, the World Bank also emphasised the need for continued vigilance and policy adjustments to navigate potential challenges and uncertainties on the global economic horizon.
