The World Bank has marked Nigeria’s output growth for the year 2023 down to 2.8 percent, due to the slow performance of the country’s economy in the first quarter of the year.
In its June Global Economic Prospects, the World Bank said that Nigeria’s economy is expected to see faster growth of three percent and 3.1 percent in 2024 and 2025 respectively.
The Washington-based financial institution had projected a 2.9 percentage point output growth. June’s 2.8 percent estimate is 0.3 percent lower than the 3.1 percent real growth expansion recorded last year.
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The Bank has expressed concerns over the sluggish growth of the country from 2023 to 2024, emphasizing that it falls short of the necessary progress required to effectively address extreme poverty.
During the first quarter, the gross domestic product (GDP) experienced a slowdown due to a shortage of cash, resulting in a modest growth rate of 2.3 percent.
Sub-Saharan Africa (SSA) is projected to achieve an average growth rate of 3.2 percent this year, surpassing the global average of 2.1 percent by over one percentage point.
The report highlights that financing requirements are expected to remain high due to increased borrowing costs, reduced oil production and prices, and ongoing fiscal and external pressures, compounded by weak domestic revenue generation.
The report states, “Nigeria, the largest economy in the region, experienced further easing of growth in early 2023 as challenges in oil production persisted, constraining its recovery.”
“The non-oil sector, which drove economic activity last year, lost momentum at the beginning of this year due to persistently high inflation, foreign exchange shortages, and a shortage of banknotes resulting from currency redesign,” the report adds.
More than half of the downward revision for SSA growth in 2023 can be attributed to a significant slowdown in South Africa. Downgrades are widespread across energy and metal producers, as well as countries with limited natural resources.
“Excluding South Africa, growth in SSA is expected to decelerate from 4.2 percent in 2022 to 3.9 percent this year. While this represents a slight revision from January, this rate of expansion is still one percentage point below the average observed between 2000 and 2019,” the report explains.
Regarding the global forecast, the report states, “Stronger-than-expected activity in early 2023 is anticipated to push average annual growth 0.2 percentage point higher than the January forecast, despite an expected slowdown in the second half.”
However, the report cautions that the projected growth for 2024 is weaker than previously anticipated, primarily due to the delayed impact of increased monetary policy rates and additional challenges stemming from tighter credit conditions.