Nigeria’s economy is projected to expand at a modest rate of 1.8 percent in 2021 and edge up to 2.1 percent next year, assuming higher oil prices, a gradual implementation of structural reforms in the oil sector, and a market-based flexible exchange rate management, the World Bank said on Tuesday.
The projected growth of Africa’s largest oil producer is 0.7 percentage points compared to 1.1 earlier projected in January this year.
The expected pickup is also predicated on continued vaccinations in the second half of this year and a gradual relaxation of COVID-related restrictions that will allow activity to improve.
Nonetheless, output in Nigeria is not expected to return to its 2019 level until end-2022, the World Bank said in its June 2021 Global Economic Prospects.
Responding to the World Bank growth projection, Johnson Chukwu, managing director/CEO, Cowry Asset Management Limited, that is a very optimistic projection.
The economy grew by 0.51 percent in the first quarter of this year amid severe dislocation as a result of heightened level of insecurity which would eventually flush into the GDP growth rate, he said.
There was reduction in the growth rate of agricultural sector that accounts for more than 23 percent of the GDP and its growth dropped from 3.41 percent to 2.28 percent in the same quarter.
“We would not have seen a growth of up to 0.51 percent and given that insecurity has heightened in the current quarter, unless something happened urgently to reverse it, I think the growth rate will slow down further. So I do not see the basis or position of the World Bank’s 1.8 percent, and I think that that is overly optimistic,” Chukwu told BusinessDay through phone.
Growth is expected to resume in SSA this year, reaching 2.8 percent, and firm to 3.3 percent in 2022. This pickup is underpinned by stronger external demand from the region’s trading partners—mainly China and the United States—higher commodity prices, and better containment of COVID-19. Despite the projected rebound, SSA will have the second-slowest growth this year among emerging market and developing economy (EMDE) regions.
“I think this projection is more realistic than the IMF’s 2 5% and the figure of 3% contained in the 2021 budget,” said Uche Uwaleke, professor of capital market and president, Capital Market Academics of Nigeria.
He said the positive growth rate projection reflects the rebound in crude oil price and output. At 1.8 percent, he said economic growth is still below population growth rate and not strong enough to have a significant impact on the lives of the ordinary Nigerian.
A lot will depend on the exchange rate trajectory, extent of budget implementation as well as the extent to which widespread insecurity is addressed, Uwaleke said.
The World Bank Group on Tuesday projected global economy to expand by 5.6 percent in 2021, the fastest post-recession pace in 80 years, largely on strong rebounds from a few major economies. However, many emerging market and developing economies continue to struggle with the COVID-19 pandemic and its aftermath.
Despite the recovery, global output will be about 2% below pre-pandemic projections by the end of this year. Per capita income losses will not be unwound by 2022 for about two-thirds of emerging market and developing economies.
Among low-income economies, where vaccination has lagged, the effects of the pandemic have reversed poverty reduction gains and aggravated insecurity and other long-standing challenges.
“While there are welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world,” said World Bank Group President David Malpass.
