The World Bank in its latest report has downgraded Nigeria’s growth prediction for 2019 to 2.1% as against the earlier growth forecast of 2.2%. The disclosure was made in the June 2019 edition of the World Bank’s Global Economic Flagship Report.
Similarly, the World Bank stated that slower-than-expected mining and oil production, combined with domestic policy uncertainties have delayed the growth recovery in some of the largest commodity exporters in Sub-Saharan Africa (Angola, Nigeria, South Africa).
Sub-Saharan Growth: The World Bank stresses that the economic environment in Sub-Saharan Africa (SSA) remains challenging, stating that the external and domestic headwinds that caused the slowdown in 2018 are dissipating more slowly than previously envisaged.
Specifically, the World Bank group stresses that the growth of the three largest African economies (Angola, Nigeria, and South Africa) in the region has remained subdued in 2019.
The Bank explained that the ease in external financing conditions and recovering commodity prices have only partly offset the Weak external demand from major economies, persistent policy uncertainty, and domestic growth bottlenecks.
Some largest economies – The World Bank stated that South Africa’s continued policy uncertainty and rolling power blackouts have slowed economic activity in the first half of 2019. However, the Bank expects the country’s economy to be strengthened through easier external financing conditions and as the new administration fast-tracks reforms to transform the business environment.
Meanwhile, the World Bank stressed that excluding Angola, Nigeria, and South Africa, SSA growth is expected to be more robust through other countries.
- Angola is expected to emerge from three years of contraction
- Cameroon and Ghana’s investment in new oil and natural gas capacity will aid in growth recovery in the region
- Rise in mining production in the Democratic Republic of the Congo and Guinea will spur growth
- Ethiopia, Rwanda, Tanzania and Uganda will record growth due to the rise in the private sector’s participation.
Bottom Line: In April 2019, the World Bank retracted its forecast by stating that its growth projection for Africa is now 2.8 percent. The latest prediction brings the World Bank and CBN predictions to 2.1%, while the IMF still stands at 2.2%.
Explaining the reasons for a decline in Nigeria’s growth forecast, the World Bank stated the downward review of the country’s growth is due to continued constraints from foreign exchange restrictions, supply disruptions in the oil sector, and a lack of much-needed reforms to spur new capacity.
According to the World Bank Group President David Malpass,
“Stronger economic growth is essential to reducing poverty and improving living standards. Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential.
“It’s urgent that countries make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment.”
What this means: The 2.1% growth forecast for the Nigerian economy implies activities may slow down further in the course of the year. The Central Bank of Nigeria (CBN) emphasized in its recent Monetary Policy communique that the economy is underperforming its capacity. However, if the 2.1% growth is achieved, it means the economy will have improved its growth by only 0.17% in a year.