Nigeria Surges Ahead: World Bank Projects 3.3% Growth in 2024.
The World Bank has revised upwards its 2024 growth projections for Nigeria from 2.9 per cent projected in October last year to 3.3 per cent for this year and 3.7 per cent for 2025, in its January 2024 Global Growth Prospects.
The global economy is set to rack up a sorry record by the end of 2024 – the slowest half-decade of GDP growth in 30 years, according to the World Bank’s latest Global Economic Prospects report.
The World Bank is basing its upward review on the expectation that reforms in the country would begin to yield fruits. This is as it expects global growth to slow for a third year in a row to 2.4 per cent before ticking up to 2.7 percent in 2025.
According to report, growth in Nigeria is projected at 3.3 per cent this year and 3.7 percent in 2025, up 0.3 and 0.6 percentage point, respectively, since June as macro-fiscal reforms gradually bear fruits.
“The baseline forecast implies that per capita income will reach its pre-pandemic level only in 2025. Growth is expected to be driven mainly by agriculture, construction, services, and trade. Inflation should gradually ease as the effects of last year’s exchange rate reforms and removal of fuel subsidies fade.
“These structural reforms are expected to boost fiscal revenue over the forecast period.”
Meanwhile the report projected a rebound in growth in Sub-Saharan Africa (SSA) to 3.8 percent in 2024 and 4.1 percent in 2025.
It noted that the growth is due to country-specific factors that have temporarily weighed on growth, including reduced fiscal support and metal exporting economies’ adjusting to lower prices, gradually ease.
“Nevertheless, elevated costs of living continue to limit consumption growth, and political instability has increased in parts of the region.
“High debt burdens and interest rates have narrowed fiscal space and heightened financing needs. Despite the projected pickup in growth, increases in per capita incomes will remain inadequate to enable the region’s economies make significant progress in reducing extreme poverty. Risks to the baseline growth forecast remain tilted to the downside.
“They include a further rise in global or regional instability, such as the possible escalation of the conflict in the Middle East, which could drive up global energy and food prices; a sharper-than-expected global economic slowdown; increased frequency and intensity of adverse weather events; and increased defaults if attempts to reduce elevated public debt burdens were to fail. Materialisation of these risks would also exacerbate poverty and limit the ability of many countries to cope with climate change,” it stressed.
Growth in Sub Sahara Africa, according to the report, decelerated to an estimated 2.9 percent in 2023, which is 0.3 percentage point lower than projected in June, with higher input prices for businesses in Nigeria and an energy crisis in South Africa, contributing to a slowdown in the region’s economic activity during 2023.
Growth in the region’s three largest economies, Nigeria, South Africa and Angola, slowed to an average of 1.8 percent in 2023. In Nigeria, the region’s largest economy, growth softened to an estimated 2.9 percent in 2023.
While services growth weakened markedly in 2023, partly driven by a disruptive currency demonetisation policy in the first quarter of 2023, annual oil production increased after a notable decline in previous years
By one measure, the global economy is in a better place than it was a year ago: the risk of a global recession has receded, largely because of the strength of the U.S. economy. But mounting geopolitical tensions could create fresh near-term hazards for the world economy.
Meanwhile, the medium-term outlook has darkened for many developing economies amid slowing growth in most major economies, sluggish global trade, and the tightest financial conditions in decades. Global trade growth in 2024 is expected to be only half the average in the decade before the pandemic.
Borrowing costs for developing economies – especially those with poor credit ratings – are likely to remain steep with global interest rates stuck at four-decade highs in inflation-adjusted terms, the World Bank said.
Global growth is projected to slow for the third year in a row—from 2.6 percent last year to 2.4 percent in 2024, almost three-quarters of a percentage point below the average of the 2010s. Developing economies are projected to grow just 3.9 percent, more than one percentage point below the average of the previous decade.
After a disappointing performance last year, low-income countries should grow 5.5 percent, weaker than previously expected. By the end of 2024, people in about one out of every four developing countries and about 40 percent of low-income countries will still be poorer than they were on the eve of the COVID pandemic in 2019. In advanced economies, meanwhile, growth is set to slow to 1.2% this year from 1.5% in 2023.