Six months after it projected a 1.1 per cent growth for Nigeria, the World Bank says Nigeria’s economy will grow at 1.8 per cent this year and edge up to 2.1 per cent in 2022.
The Bretton Wood institution had in January made the 1.1 percent growth projection after the COVID-19-induced sharp recession in 2020 and contracted the Gross Domestic Product (GDP) by 1.92 percent.
But in its June 2021 Global Economic Prospects released on Tuesday in Washington D.C, United States (U.S.), the World Bank indicated that achieving such growth rates will be dependent on higher oil prices, structural oil sector reforms, and market-based flexible exchange rate management.
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The bank said: “Elsewhere in the region, growth in industrial commodity exporters excluding Angola, Nigeria and South Africa is expected to pick up to 2.4 per cent in 2021 to 22.
“In agricultural commodity exporters, growth is forecast to resume at a faster pace of 4.5 percent a year on average in 2021 to 22.”
It also pegged global economy growth at 5.6 per cent in 2021, although many emerging market and developing economies continue to struggle with the COVID-19 pandemic and its aftermath.
The 5.6 per cent expected growth, the fastest post-recession pace in 80 years, is an upward review from the 4.1 per cent forecast in January.
According to the bank, despite the recovery, global output will be about two percent below pre-pandemic projections by the end of the year.
World Bank Group President David Malpass said that while there were welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world.
He said that globally coordinated efforts were essential to accelerate vaccine distribution and debt relief, particularly for low-income countries.
Malprass said: “As the health crisis eases, policymakers will need to address the pandemic’s lasting effects and take steps to spur green, resilient, and inclusive growth while safeguarding macroeconomic stability.”
The report said that lowering trade costs such as cumbersome logistics and border procedures could help bolster the recovery among emerging market and developing economies by facilitating trade.
The bank further explained that while some countries (Ghana, Nigeria and South Africa) are upgrading national vaccine distribution systems, procurement and logistical hurdles in many other countries could further slow vaccinations.
It said: “An oil price drop could dent revenues for some oil exporters. Food insecurity remains a key risk as food prices have risen by more than 20 percent early this year in Angola, Ethiopia and Nigeria.
“Flood and drought could also destroy crops, exacerbate food price inflation, and further weigh on household consumption. Rising conflicts could weaken recoveries.”
The bank said a sudden rise in sovereign borrowing costs could instigate financial pressures in some countries and high debt burdens and fiscal pressures could become more acute.
“At the same time, the pace of vaccinations could surpass expectations, restoring consumer and business confidence and strengthening the recovery. A stronger-than-expected rally in metal and oil prices could boost revenues,” it said.
The bank said growth output in Sub-Saharan Africa shrank an estimated 2.4 percent in 2020 as a result of the COVID-19 pandemic, a milder-than-expected recession.
“It went on: Growth has gradually resumed this year, reflecting positive spillovers from strengthening global economic activity, including higher oil and metal prices, and some progress in containing COVID-19, especially in Western and Central Africa. The pandemic has contributed to wider budget deficits and a spike in government debt, heightening the risk of debt distress in some countries,” it said.
The bank said activity in the three largest economies—Angola, Nigeria, and South Africa—has partially recovered. Many industrial and agricultural commodity exporting countries experienced deep contractions last year.The bank said: “In tourism-reliant countries, international arrivals have been at a near-halt, and tourism is likely to remain slow until wider vaccination permits safe reopening to international travel. Despite improvement, COVID-19 has continued to have adverse impacts on health, schooling, investment, and economic growth.
“In some countries (Angola, Nigeria), accommodative monetary and fiscal policies, currency depreciations, and rising food and energy prices have stoked inflation.
“Elsewhere (Kenya, South Africa), subdued demand has kept inflation in check. Foreign direct investments in the region have been resilient, recouping about nine-tenths of their pre-pandemic levels, and workers’ remittances to the region have held up better than expected.”