Nigeria’s economic growth is expected to decelerate to 2.9 percent in 2023 and remain at that pace through 2024, the World Bank has said in a new report.
The 2.9 percent GDP growth rate is contrary to the Nigerian government’s projection of a 3.75 percent GDP growth rate for the economy in 2023.
Zainab Ahmed, Minister of Finance, Budget and National Planning, had, while presenting the N21.8 trillion 2023 budget, said the country’s GDP was expected to grow at 3.75 percent in 2023, moderate to 3.3 percent in 2024 before picking up to 3.46 percent in 2025.
But the World Bank, in its Global Economic Prospects report published late Tuesday, projected Nigeria’s economy to decelerate to 2.9 percent in 2023 and remain at that pace in 2024, barely above population growth.
According to the World Bank report, continued weakness in the oil sector is likely to restrain the growth momentum in the non-oil sector.
This is just as a recovery in oil output is expected to be encumbered by existing production and security challenges as well as moderation in oil prices.
A confluence of factors including pipeline vandalism and massive crude oil theft has over time hindered optimization of Nigeria’s oil production capacity. The situation worsened in 2022, such that Nigeria’s oil output dropped drastically below the OPEC-assigned quota.
The global financial institution as well said policy uncertainty, sustained high inflation, and rising incidence of violence would likely continue to temper growth.
It projected a continued weak fiscal position for Nigeria due to high borrowing costs and lower energy prices, while growth in agriculture was projected to drop.
“Growth in agriculture is expected to soften because of the damage from last year’s floods,” the World Bank report said.
“The fiscal position is expected to remain weak because of high borrowing costs, lower energy prices, a sluggish growth of oil production, and a subdued activity in the non-oil sectors,” it said.
Across sub-Saharan Africa, the World Bank projected a better performance as an expected moderation of global commodity prices tempers cost-of-living increases.
“Growth in SSA is projected to edge up in 2023 to 3.6 percent—a 0.2 percentage point downward revision from the June forecast—before picking up to 3.9 percent in 2024,” the World Bank said.
“Even though an expected moderation of global commodity prices should temper cost-of-living increases, tighter policy stances to address elevated inflation and public debt will weigh on domestic demand,” it said.
On a global scale, the World Bank said weakening growth in advanced economies and China would likely pose headwinds for external demand, particularly among exporters of industrial commodities.
“Constrained access to external financing, tight fiscal space, and high borrowing costs are expected to markedly limit many governments’ ability to spur faster growth,” it said.
