The World Bank has disclosed that Nigeria’s GDP growth rate is expected to decelerate to 2.9 percent in 2023 and remain at that pace in 2024 which is barely above population growth.
World Bank revealed this in its Global Economic Prospects report published late Tuesday night.
They noted that growth in Sub-Saharan Africa is projected to edge up in 2023 to 3.6per cent before picking up to 3.9 percent.
Nigeria: The World Bank stated that the growth momentum in the non-oil sector is likely to be restrained by continued weakness in the oil sector.
“In Nigeria, growth is projected to decelerate to 2.9 percent in 2023 and remain at that pace in 2024—barely above population growth. Growth momentum in the non-oil sector is likely to be restrained by continued weakness in the oil sector.
“Existing production and security challenges and moderation in oil prices are expected to hinder a recovery in oil output. Policy uncertainty sustained high inflation, and rising incidence of violence are anticipated to temper growth.”
High borrowing costs: The Bank added that Nigeria’s fiscal position is to remain weak due to high borrowing costs and lower energy prices.
“Growth in agriculture is expected to soften because of the damage from last year’s floods. The fiscal position is expected to remain weak because of high borrowing costs, lower energy prices, a sluggish growth of oil production, and a subdued activity in the non-oil sectors.”
Sub-Saharan Africa: They revealed that the rest of the continent is expected to perform better, citing that an expected moderation of global commodity prices should temper cost-of-living increases.
“Growth in SSA is projected to edge up in 2023 to 3.6 percent—a 0.2 percentage point downward revision from the June forecast—before picking up to 3.9 percent, in 2024.
“Even though an expected moderation of global commodity prices should temper cost-of-living increases, tighter policy stances to address elevated inflation and public debt will weigh on domestic demand.
“Meanwhile, weakening growth in advanced economies and China is expected to pose headwinds for external demand, particularly among exporters of industrial commodities. Constrained access to external financing, tight fiscal space, and high borrowing costs are expected to markedly limit many governments’ ability to spur faster growth.”
The report also revealed that among the oil-producing countries, government debt fell by nearly 10 percent of GDP on average, due to fiscal surpluses and stronger exchange rates.
However In contrast, debt sustainability and investor sentiment deteriorated further in many other countries, leading to rising borrowing costs (credit spreads widened markedly in several countries, for example, in Ghana and Zambia) Capital outflows, credit rating downgrades (Ghana, Nigeria), and large currency depreciations
“Financing deficits also became increasingly challenging, with international bond issuance by governments in the region stalling in the second half of last year,” they added.
Meanwhile, Minister of Finance Zainab Ahmed during the presentation of the 2023 N21.8 trillion budget stated that Nigeria’s GDP growth rate is expected to be 3.75% for the year.
Ahmed said real GDP is projected to be 3.75% in 2023, compared to 4.47% projected in the medium-term development plan.
“Growth is expected to moderate to 3.3% in 2024 before it picks up to 3.46% in 2025, the inflation rate is expected to average 17.16% in 2023. So we are expecting inflation to moderate and begin to go down, and end of 2023 should average 17.16% and decline to 15.93%.”
