Nigeria’s economic growth is projected at 2.8% in 2023, with a marginal increase to 3.0% in 2024, but per capita income growth remains sluggish at only 0.4% per year on average, falling short of reducing extreme poverty significantly.
The World Bank warns of obstacles such as foreign exchange restrictions, high living costs, security challenges, and limited fiscal space, which are expected to hinder Nigeria’s growth momentum.
Sub-Saharan Africa’s growth is expected to slow to 3.2% in 2023, with downgrades in energy and metal producers and non-resource-rich countries, affecting the overall growth of the region.
The World Bank has recently disclosed its projections for Nigeria’s economic growth, estimating it at 2.8% in 2023 with a slight revision since January and a marginal increase to 3.0% in 2024.
However, the bank emphasizes that this growth rate will only result in a meager per capita income growth of 0.4% per year on average in 2023-24, falling far short of what is necessary to make significant progress in reducing extreme poverty.
Additionally, the report warns of various obstacles, including foreign exchange restrictions, high living costs, security challenges, and limited fiscal space, which are expected to impede growth momentum, as highlighted in the June 2023 Global outlook.
The growth projection
World Bank stated that Africa’s three largest economies in Sub-Saharan Africa-Nigeria, South Africa, and Angola projected to grow by about 2.1% annually over 2023-24,
“A rate more than 2 percentage points per year below the 2000-19 average, is expected to continue to inhibit the overall growth of the region.
“The outlook for smaller producers of metals, oil, and agricultural commodities is dimmed by an expected weakening of global commodity prices, with growth forecasts for these groups of countries downgraded for both 2023 and 2024.
“In addition to multiple external and domestic headwinds, many of these countries are confronted with increased fragility because of pervasive insecurity and political instability, as well as persistent poverty.
Growth in Nigeria is projected at 2.8 % in 2023, revised down marginally since January, and is forecast to inch up to 3.0% in 2024.
“This translates to per capita income growth of only 0.4% a year on average in 2023-2024, far slower than that needed to make significant inroads into mitigating extreme poverty.
“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.
They added 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.
World Bank forecasts that After growing 3.1% last year, the global economy is set to slow substantially in 2023, to 2.1%, amid continued monetary policy tightening to rein in high inflation, before a tepid recovery in 2024, to 2.4%.
“ Tight global financial conditions and subdued external demand are expected to weigh on growth across emerging market and developing economies (EMDEs).
“ Projections for many countries have been revised down over the forecast horizon, with upgrades primarily due to stronger-than-expected data at the beginning of 2023 more than offset by downgrades thereafter.
“ Inflation has been persistent but is projected to decline gradually as demand weakens and commodity prices moderate, provided longer-term inflation expectations remain anchored.”
They added that Global growth could be weaker than anticipated in the event of more widespread banking sector stress, or if more persistent inflation pressures prompt tighter-than-expected monetary policy as Weak growth prospects and heightened risks in the near term compound a long-term slowdown in potential growth, which the overlapping shocks of the pandemic have exacerbated, the Russian Federation’s invasion of Ukraine, and the sharp tightening of global financial conditions.
Growth in Sub-Saharan Africa is expected to slow from 3.7% in 2022 to 3.2 % this year, a 0.4 percentage point downgrade from January forecasts with a moderate improvement to 3.9% next year.
“Over half of the 2023 downgrade is attributable to an abrupt slowdown in South Africa. However, downgrades are widespread across energy and metal producers, and non-resource-rich countries.
“Excluding South Africa, growth in SSA is expected to slow from 4.2% in 2022 to 3.9% this year. While this represents a minor downgrade from January, this pace of expansion is still a full percentage point below the 2000-19 Average
“ Although the reopening of China is expected to boost exports of some countries this year, limited access to external borrowing is forecast to hold back recoveries as debt burdens and financing needs increase.
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