World Bank Forecasts 1.8% GDP Growth for Nigeria in 2021

June 9, 2021
GDP Nigeria growth

By Dipo Olowookere

The World Bank has said Nigeria, which prides itself as the largest economy in Africa, should record an economic expansion of 1.8 per cent in 2021.

In its latest report titled June 2021 Global Economic Prospects, the global lending organisation said the gross domestic product (GDP) growth projected for the country would be achieved only if prices of crude oil remain high at the international market.

It further said if this happens and the country carries out structural oil sector reforms, coupled with a market-based flexible exchange rate management, the economy should grow in 2022 by 2.1 per cent.

Business Post reports that in 2020, as a result of the COVID-19 pandemic, output in Sub-Saharan Africa shrank an estimated 2.4 per cent, but this year, the region has witnessed a resumption of activities, which the World Bank said reflects positive spillovers from strengthening global economic activity, including higher oil and metal prices, and some progress in containing COVID-19, especially in Western and Central Africa.

The bank said in Nigeria, South Africa and Angola, which are the three largest economies in the region, there have been recoveries and the growth forecast is put at 2.8 per cent this year and 3.3 per cent next year on the back of “stronger external demand, mainly from China and the United States, higher commodity prices, and containment of COVID-19.”

But the World Bank warned that, “Conditions in the region’s fragile and conflict-affected countries are expected to be particularly challenging; their average output level in 2022 is forecast to be 5.3 per cent below its size in 2019.”

On the global scene, the lender economy is expected to expand by 5.6 per cent in 2021, the fastest post-recession pace in 80 years, largely on strong rebounds from a few major economies.

It said growth in the United States is projected to reach 6.8 per cent this year, reflecting large-scale fiscal support and the easing of pandemic restrictions.

Also, growth in other advanced economies is also firming, but to a lesser extent and among emerging markets and developing economies, China is anticipated to rebound to 8.5 per cent this year, reflecting the release of pent-up demand.

In addition, emerging market and developing economies as a group are forecast to expand 6 per cent this year, supported by higher demand and elevated commodity prices.

“While there are welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world,” the World Bank Group President, Mr David Malpass, stated.

He said further that, “Globally coordinated efforts are essential to accelerate vaccine distribution and debt relief, particularly for low-income countries.

“As the health crisis eases, policymakers will need to address the pandemic’s lasting effects and take steps to spur green, resilient, and inclusive growth while safeguarding macroeconomic stability.”

On his part, the World Bank Group Vice President for Equitable Growth and Financial Institutions, Mr Indermit Gill, submitted that, “Linkages through trade and global value chains have been a vital engine of economic advancement for developing economies and lifted many people out of poverty. However, at current trends, global trade growth is set to slow down over the next decade.”

“As developing economies recover from the COVID-19 pandemic, cutting trade costs can create an environment conducive to re-engaging in global supply chains and reigniting trade growth,” he added.

As for the World Bank Prospects Group Director, Mr Ayhan Kose, “Higher global inflation may complicate the policy choices of emerging market and developing economies in coming months as some of these economies still rely on expansionary support measures to ensure a durable recovery.”

He noted that, “Unless risks from record-high debt are addressed, these economies remain vulnerable to financial market stress should investor risk sentiment deteriorate as a result of inflation pressures in advanced economies.”

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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