The 2018 economic growth forecast for Nigeria and other sub-Saharan countries has been cut down to 2.7% by the World Bank, from the 3.1% it earlier forecast for the region. The global bank had earlier predicted in April that Africa’s recovery would gather pace in 2018, with an expected average growth of 3.1%.
Sub-Saharan big 3 economies are struggling
According to the Breton Wood institution, the drop was mainly due to the slower-than-expected growth in Africa’s largest economies – Nigeria, South Africa and Angola. It further explained that slow expansion in these three biggest economies was responsible for the weak pace of recovery on the sub-continent.
Sub-Sahara Africa had posted a fairly fast average growth rate in the years leading up to 2015, but commodity prices crashed in 2015-16, which led to a loss of momentum in economic output.
Lower oil production in Nigeria and Angola offset higher prices while South Africa’s contraction in agriculture compounded the weak household consumption growth in the rainbow nation.
Nigerian economy is already shrinking
Nairametrics had earlier published an article a few weeks ago, where it brought its readers’ attention to the struggling state of the Nigerian economy; after recovering from the economic recession in the second quarter of 2017. The economy had initially posted post-recession economic recovery in the third and second quarter of 2017, before it began declining gradually in the first quarter of 2018 – when GDP fell to 1.95% representing a quarter on quarter decline of 7.58%. Since then, the Nigerian economy has been recording macro-economic indices which show that the economy is really on a decline.
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Key sectors posting negative GDP growths
- The Oil sector posted a negative Real GDP growth for the first time since Q1 2017(when the economy was still in recession) by posting a declined growth of -3.95% in Q2 2018 from 14.77% recorded in the previous quarter of Q1 2018.
- Considering the fact that the oil sector is the life wire of the economy and almost single-handedly brought the economy out of recession with a GDP growth of 23.03% in Q2 2017; the quarter on quarter decline of 18.72% should be a worrisome development for the economy.
- The manufacturing sector’s real GDP also dropped to 0.68% in the second quarter of 2018 from 3.39% recorded in Q1 2018.
- This shows that the manufacturing sector contracted by 2.17% on a quarter on quarter basis.
- The decline in the exports and GDP of Manufacturing and Solid Minerals sectors is an ominous sign that the federal government’s diversification efforts are not yielding the needed results.
- Agricultural real GDP growth declined to 1.19% (lower than that of recession period) to record its lowest growth in several years, while the finance and insurance sector’s real GDP also slumped to 1.28% from 13.0% in Q1 2018.