Yesterday, the World Bank issued a warning that Nigeria’s economic expansion is insufficient to tackle the issue of the country’s extreme poverty.
Amid difficulties with rising inflation, a lack of foreign currency, and banknote shortages brought on by the redesign of the currency, the bank has maintained its economic growth (Gross Domestic Product, or GDP) prediction of 2.8% for Nigeria in 2023.
The cautionary statement was made by the World Bank in its Global Development Prospect report for June 2023.
The bank, among other things, lowered its estimate of Sub-Saharan Africa’s economic growth from 3.4% in its April World Economic Outlook to 3.2% for 2023. Additionally, it predicted that due to financial uncertainties, the rate of global economic growth will decrease to 2.1% in 2023.
According to the World Bank, “After growing 3.1 percent last year, the global economy is set to slow substantially in 2023 to 2.1 percent, amid continued monetary policy tightening to rein in high inflation, before a tepid recovery in 2024, to 2.4 percent.
“Growth in Sub-Saharan Africa (SSA) continued to decelerate earlier this year owing to various country-specific challenges and heightened external economic headwinds.
“Growth in the three largest SSA economies – Nigeria, South Africa and Angola – slowed to 2.8 percent in 2022 and continued to weaken in the first half of this year. In Angola and Nigeria – SSA’s largest oil producers – the growth momentum has stalled amid lower energy prices and stagnant oil production.
“The post-pandemic rebound in Nigeria’s non-oil sector cooled earlier this year because of persistently high inflation, foreign exchange shortages, and shortages of banknotes caused by currency redesign.
“Growth in SSA is expected to decline further to 3.2 percent in 2023 before picking up to 3.9 percent in 2024. The recovery in South Africa is projected to slow to 0.3 percent this year as widespread power outages weigh heavily on activity and contribute to the persistence of inflation.
“Growth in Nigeria is expected to remain barely above the population growth – far slower than needed to make significant inroads into mitigating extreme poverty.
“Outlook downgrades, however, extend beyond the major regional economies with elevated cost of living restraining private consumption and tighter policies holding back a pickup in investment in many countries.
“More broadly, worsened domestic vulnerabilities together with tight global financial conditions and weak global growth are expected to keep recoveries subdued.”
