TUE, JUNE 06 2023-theGBJournal |Nigeria growth is projected at 2.8 percent in 2023, revised down marginally since January, and is forecast to inch up to 3 percent in 2024, according to the latest World Bank Global Economic Prospects report.
”This translates to per capita income growth of only 0.4 percent a year on average in 2023-24—far slower than that needed to make significant inroads into mitigating extreme poverty,” the World Bank said.
According to the report; with continued structural challenges in the oil sector expected to keep oil production below the average of the last five years, growth is projected to be driven mainly by the non-oil sector.
”However, foreign exchange restrictions, high living costs, security challenges, and limited fiscal space are expected to constrain growth momentum. Financing needs are projected to remain elevated, due to higher borrowing costs, lower oil production and prices, and persistent fiscal and external pressures amid weak domestic revenue mobilization.”
The World Bank notes that growth in Nigeria, the region’s largest economy, eased further in early 2023 as a rebound in oil output remained constrained by persistent production challenges.
”The recovery in the non-oil sector, which propelled activity last year, lost momentum early this year amid persistently high inflation, foreign exchange shortages, and shortages of banknotes caused by currency redesign.”
Sub-Saharan Africa growth is also projected to slow to 3.2 percent in 2023, as external headwinds, persistent inflation, higher borrowing costs, and increased insecurity weigh on activity.
”Recoveries from the pandemic remain incomplete in many countries, with elevated costs of living tempering the growth of consumption,” the World said.
The Bank notes that fiscal space has narrowed further, while surging import bills and higher debt burdens have heightened financing needs.
”Although the baseline projection for 2024-25 envisions a pickup in growth, per capita incomes are expected to expand much more slowly than needed to make progress in reducing extreme poverty.”
Risks to the baseline remain tilted to the downside. These include a deeper-than-expected global economic slowdown, deteriorating terms of trade, higher inflation along with further domestic and international monetary policy tightening, renewed financial distress in advanced economies, and more adverse weather events.
”Materialization of these risks would not only dampen growth, but also exacerbate poverty and limit the ability of many countries to strengthen climate resilience,” the World Bank said.
Meanwhile, Global growth is forecast to decelerate from 3.1% in 2022 to 2.1% in 2023, reflecting broad-based downgrades.
Yet, as the World Bank Group’s latest Global Economic Prospects report makes clear, new hazards are threatening to make matters worse.
Despite the steepest global interest-rate hiking cycle in four decades, inflation remains high; even by end-2024, it will remain above the target range of most inflation-targeting central banks.
”Policymakers in most economies will need to be exceptionally agile to cope with the risks that come with such rate hikes,” the World Bank warns.
”Today, high interest rates aren’t merely crimping growth in EMDEs; they are also dampening investment and intensifying the risk of financial crises. These challenges would intensify in the event of more widespread banking-sector strains in advanced economies.”
The World Bank’s latest projections indicate that the world economy will remain frail—and at risk of a deeper downturn—this year and in 2024.
”Our baseline scenario calls for global growth to slow from 3.1 percent in 2022 to 2.1 percent in 2023, before inching up to 2.4 percent in 2024,” World Bank said.
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