According to the World Bank, Nigeria’s economy is anticipated to experience a growth rate of 3.3 percent in the current year. This is an increase of 0.4 percentage points from the previous year’s closing rate of 2.9 percent. While this projection falls slightly below the expected expansion of sub-Saharan Africa at 3.8 percent, it still surpasses the estimated global average of 2.3 percent by a considerable margin. The World Bank’s Global Economic Prospect (GEP) report maintains an optimistic outlook for Nigeria, forecasting a robust growth of 3.7 percent in the coming year.
This projection surpasses the global output growth by over one percentage point, highlighting Nigeria’s potential for substantial economic expansion. The global bank’s increasing optimism in the economy’s potential has been reaffirmed by the latest projections for 2024 and 2025, which far surpass the June forecasts of 3.0 and 3.1 per cent, respectively. These projections serve as evidence that the downstream oil and foreign exchange reforms, initiated in the middle of last year, have had a significant impact.
Growth drivers include farming, building, rendering services, and others.
The bank also highlights the gradual positive outcomes from the macro-fiscal reforms that commenced in June, anticipating a return to pre-pandemic per capita income levels by 2025. The primary drivers of growth, as highlighted, would originate predominantly from sectors such as farming, building, rendering services, and engaging in commercial activities. As outlined in the report, inflation in Nigeria is anticipated to diminish gradually due to the diminishing impact of exchange rate reforms and the elimination of fuel subsidies from the previous year.
Additionally, the implementation of structural reforms is predicted to enhance fiscal revenue. In regards to Sub-Saharan Africa (SSA), an upsurge in growth is projected, reaching 3.8 percent in 2024 and further strengthening to 4.1 percent in 2025 as inflationary pressures subside and financial circumstances improve. The estimations for regional expansion in 2024 and 2025 remain relatively consistent with the forecasts made in June. However, beneath this overall outlook lies a combination of positive revisions and negative revisions at the individual country level.
Increasing geopolitical tensions should be tackled.
Although the major economies in Sub-Saharan Africa are projected to have slower growth compared to the rest of the region, economies without abundant resources are expected to maintain a growth rate higher than the regional average. The report also states that if it excludes the three largest economies in Sub-Saharan Africa, the region as a whole is expected to experience a boost in growth from 3.9% in 2023 to 5% in 2024 and even further to 5.3% in 2025.
Also. the report noted that this year’s growth rate would be the most sluggish in three decades. However, the report also highlighted a positive aspect, stating that the global economy has improved compared to its state one year ago. Nonetheless, a warning was issued regarding the increasing geopolitical tensions, which, if not addressed adequately, may give rise to additional risks in the near future for the worldwide economy. The 2020s could be remembered as a decade full of missed chances unless significant changes are made. Economic growth in the near future will continue to be lacklustre, resulting in a dire situation for several developing nations, particularly the most impoverished ones.
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These countries will find themselves trapped in a cycle of overwhelming debt and uncertain access to food, affecting nearly a third of the population. There are numerous global priorities that would face hindrances if this were to happen. However, there are still chances to change the situation for the better. The Chief Economist and Senior Vice President of the World Bank Group, Indermit Gill, emphasised that their report provides a concise path towards progress. It clearly outlines the potential transformation that can be attained if governments take immediate action to enhance investment and fortify fiscal policy frameworks.
World Bank: Website