The World Bank’s recent report, “Global Economic Prospect: Subdued Growth, Multiple Challenges,” estimated that Africa’s largest economy will grow by 3.3%, up from 2.9% in 2023.
According to the research, “Growth in Nigeria is projected to be 3.3% this year and 3.7% in 2025—up 0.3 and 0.6 percentage points, respectively, since June—as macroeconomic reforms gradually bear fruit.
“The baseline forecast implies that per capita income will reach its pre-pandemic level only in 2025.”
The Washington-based bank ascribed the momentum to the gradual implementation of existing macro-fiscal reforms.
According to the international bank, agriculture, construction, services, and trade will fuel the country’s economic growth.
The 2023 State of Global Food and Nutrition Security report states that there has been a 133% increase in food insecurity among Nigerians in just three years. The figure increased from 63.8 million between 2014 and 2016, to 148.7 million between 2020 and 2022.
“Inflation should gradually ease as the effects of last year’s exchange rate reforms and removal of fuel subsidies fade. These structural reforms are predicted to boost fiscal revenue over the forecast period,” the World Bank declared.
It stated that the Nigerian economy fell to an expected 2.9% in 2023 as a result of the disruptive currency demonetization program, which involved replacing old high-denomination naira notes.
“Growth in the region’s three largest economies—Nigeria, South Africa, and Angola—slowed to an average of 1.8 per cent last year, weighing on the region’s total growth.
“In the region’s other countries, growth slowed to 3.9%, indicating a steep drop in metal exporters’ growth and weaker global metal prices. Furthermore, strong and protracted conflicts impeded progress in numerous countries.
“More broadly, post-pandemic recoveries were slowed by weakening external demand and domestic policy tightening to address persistent inflation,” according to the report.
According to the National Bureau of Statistics, Nigeria’s GDP was N60.66 trillion in the third quarter of 2023, having grown at a rate of 2.54%.
According to the agency, the growth rate was greater than the 2.25 per cent reported in Q3 2022 and the 2.51 percent growth in Q2 2023.
However, there were concerns that mounting public debt, chronic inflation, a high cost of living, and a bad business environment would continue to undermine Nigeria’s growth prospects.
The country’s inflation rate reached a 21-year high of 28.92 per cent in December 2023.
The public debt increased to N87.91 trillion in the third quarter of 2023, according to Debt Management Office figures.
According to the United Nations’ ‘World Economic Situation and Prospects 2024′ study, African countries’ fiscal positions will continue to deteriorate due to high public debt and a low domestic revenue base in 2023.
“Efforts to enhance in-country oil refining capacity are projected to lower domestic fuel prices in 2024 and beyond. Energy subsidy reforms in Nigeria, Angola, and Gambia, as well as tax increases in Kenya, Ghana, and South Africa, aim to alleviate the government’s economic constraints.”
