Inflation: World Bank lowers Nigeria’s economic growth projection for 2023 to 2.9%

The World Bank Group reduced its economic growth outlook for Nigeria in 2023 from its initial projection of 3.3 percent to 2.9 percent on Wednesday, citing currency pressure, insecurity, and other difficulties.

This was stated in the most recent edition of the multilateral organization’s “Africa Pulse,” a macroeconomic outlook for the region that was published on Wednesday, where it was noted that Sub-Saharan Africa’s economic outlook remained dire despite an elusive growth recovery.

Top African oil producers include Nigeria and Angola.

According to the report, the region’s growth prospects were being adversely impacted by rising instability, sluggish growth in the region’s biggest economies, and persistent global economic uncertainty.

The report predicted a slowdown in Sub-Saharan Africa’s economic growth, from 3 point six percent in 2022 to 2 point five percent in 2023.

The institution in Washington claimed: “As energy and transportation bottlenecks continue to bite, South Africa’s GDP is expected to only grow by 0.5% in 2023. Due to lower global oil prices and currency pressures affecting both oil and non-oil activity, Nigeria and Angola are expected to grow at 29% and 13%, respectively.

The region is experiencing an uptick in conflict and violence, which is putting a strain on its economy. Climate shocks could make things even more fragile.

“As a result of the internal conflict, which is paralyzing state capacity, halting production, and destroying human capital, economic activity in Sudan is predicted to decline by 12%. ” .

In terms of growth per person, the World Bank report noted that Sub-Saharan Africa has not experienced growth since 2015.

In fact, the region, it was added, was expected to contract at an annual average rate per capita of 0.1% over 2015–2025, potentially marking a lost decade of growth in the wake of the 2014–15 collapse in commodity prices.

Andrew Dabalen, the chief economist for Africa at the World Bank, commented: “The region’s poorest and most vulnerable people continue to bear the economic brunt of this slowdown, as weak growth translates into slow reductions in poverty and poor job growth.

“There has never been a more pressing need for policymakers to transform their economies and provide growth to people through better jobs, given that up to 12 million young Africans enter the labor market annually across the region.

Despite the bleak outlook, the bank pointed out that there were a few positive developments, noting that inflation was predicted to fall from 9 percentage points in 2022 to 7 percentage points in 2023.

According to the report, fiscal balances are improving in African nations that are implementing careful macroeconomic planning.

“In 2023, the West African Economic and Monetary Union (WAEMU) is projected to grow by 51%, compared to a 49% growth rate for the Eastern African Community (EAC).

However, there are still a lot of countries with high risk of external debt distress or who are already in debt distress as of June 2023.

“Overall, regional growth rates at the moment are insufficient to generate enough high-quality jobs to keep up with increases in the working-age population. According to the World Bank report, current growth patterns only produce three million formal jobs annually, leaving many young people underemployed and working in insecure, piecemeal jobs that do not fully utilize their skills.

It further argued that giving young people access to jobs would spur inclusive growth and turn the continent’s demographic wealth into an economic boon.

“The enormous opportunity from demographic transitions that we have seen in other regions highlights the urgency of the jobs challenge in Sub-Saharan Africa.

According to World Bank economist and report contributor Nicholas Woolley, “this will call for an ecosystem that supports private-sector development and firm growth, as well as skill development that matches business demand.”.