Citing high oil prices, further recovery in agriculture and manufacturing as well as key structural reforms such as the Petroleum Industry Act (PIA), the World Bank has raised its 2022 growth forecast for Nigeria to 3.4 per cent, from the 2.5 per cent it projected for the country in January.
The Bank, which stated this in its latest Global Economic Prospects report released yesterday, also raised its growth forecast for the country in 2023 to 3.2 per cent from the 2.8 per cent it forecast in January.
However, in its Africa’s Pulse report released in April, the World Bank had projected growth rates of 3.8 per cent and 4 per cent for Nigeria in 2022 and 2023 respectively. According to the latest Global Economic Prospects report, although high oil prices was key to the Bank’s upward revision of Nigeria’s growth forecasts for 2022 and 2023, production challenges in the country’s oil sector and higher food prices will continue to restrain growth.
The report said: “In Nigeria, growth is projected to edge up to 3.4 per cent in 2022, but will soften to 3.2 per cent in both 2023 and 2024. Stronger growth this year reflects support from elevated oil prices, thefurtherrecoveryin agricultureandmanufacturing, and structural reforms (for example, the Petroleum Industry Act of 2021). “Production challenges in the oil sector are expected to persist, weighing on growth. Recovery in non-oil sectors is envisioned to continue, although shortages of fuel and higher food prices would restrain growth. Four in ten Nigerians live below the poverty line, with many more at risk of falling into poverty and becoming food insecure. Increases in food prices would further erode domestic demand.”
It stated that while high oil prices are supporting activity in Nigeria and Angola -the two biggest oil producing economies in Sub- Saharan Africa (SSA) – growth in the region is, “ projected to slow to 3.7 percent this year, reflecting forecast downgrades in over 60 percent of regional economies.” “Price pressures, partly induced by the Russian Federation’s invasion of Ukraine, are sharply reducing food affordability and real incomes across the region. At just above 1 percent, per capita income growth in SSA is projected to remain much lower than in other Emerging Market Developing Economies (EMDEs).
More people in SSA are expected to fall into extreme poverty, especially in countries reliant on imports of foods and fuel. Fiscal space is narrowing further as governments ramp up spending on subsidies, support to farmers, and, in some countries, security,” the report said. It stated that food insecurity is worsening in SSA, especially in countries dependent on food imports, adding that: “On average, food imports account for 20 percent of total imports in SSA countries— almost twice as high as in other Emerging Markets and Developing Economies (EMDEs).”