Using a series of widely known indicators, predicting the future condition of an economy is an essential aspect of economic policymaking. Macroeconomic forecasts have become a very important part of economic decision making since domestic governments, business firms, households and foreign partners usually utilise this information towards driving efficient outcomes in the various activities they engage in.
A crucial indicator that people often look out for is the gross domestic product (GDP). The GDP is a widely used measure to gauge the production level in an economy over a definite period, usually a year. With the knowledge about a country’s GDP, it is easy to determine the size of that economy and to also make other important decisions ranging from choosing to invest in certain sectors of that economy, taking a holiday tour to the country, relocating permanently into the country, getting a higher degree in that country or even taking up a job in that country.
However, many experts believe that using a country’s GDP figure alone does not make a reasonable judgment about how that economy truly is. There are cases where an economy produces so much yet inhabits many poor individuals who can barely afford two meals a day comfortably. For this reason, other indicators of an economy’s health have sprung up, and there are reports of a new measure of growth that encompasses a multifaceted spectrum of human living beyond just economic output or production.
However, GDP and its growth rate as a measure of economic size and productivity are still widely used. Nigeria’s apex banking authority and the World Bank have given their respective projection of the country’s growth rate for the year 2022.
The Central Bank of Nigeria, through its governor, Godwin Emefiele, has remarked that Nigeria’s forecast GDP growth for 2022 is 3.1 percent. This was made known to the public last December during the bank’s Monetary Policy Committee meeting.
“Though vulnerability remains due to the persistent effects of the COVID-19, the Nigerian economy is projected to strengthen in the near term. With the nearly 2.9 percent growth estimated for 2021:Q4 and the better-than-expected 2021:Q3 outcome, CBN growth forecast for 2022 was upgraded to about 3.1 percent as against a contraction of -1.92 contraction in 2020,” Emefiele remarked.
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Furthermore, the CBN expressed a positive comeback of the nation’s growth trend in former President Goodluck Jonathan’s regime, where growth hovered around 6 – 7 percent.
Accordingly, Emefiele expressed hopes that in 2022 and beyond, country-wide production levels will exceed historical levels. However, structural reforms that will shift the nation’s economic path from mediocrity towards long-run sustainable development are required.
Emefiele also boasted about the bank’s supply-side support role in the bid to stabilise the economy from the various internal and external short-run distortions that have shaken the economy in no small measure. With the effective support structure, the CBN governor expressed optimism in the country’s welfare stance. He hoped that livelihood, especially for the most vulnerable, would become more bearable, especially as business sentiments brighten and investors become more interested in the country.
However, another review of Nigeria’s projected GDP growth for 2022 reveals a different figure than the CBN’s. The World Bank has unveiled its growth forecast for Nigeria’s economy to be 2.5 percent in 2022, up from an estimate of 2.4 percent growth in 2021.
According to the World Bank’s Global Economic Prospects report, Nigeria’s forecasted growth rides on positive sentiments in the oil, telecommunication, and financial services sectors.
“In Nigeria, growth is projected to strengthen somewhat to 2.5 percent in 2022 and 2.8 percent in 2023,… the oil sector should benefit from higher oil prices, a gradual easing of the Organisation of the Petroleum Exporting Countries (OPEC) production cuts, and domestic regulatory reforms,” the report states.
However, the report maintains that positive forecast growth sentiments may be slowed by post-pandemic effects and other adverse social outcomes.
“Activity in service sectors is expected to firm as well, particularly in telecommunications and financial services. However, the reversal of pandemic-induced income and employment losses is expected to be slow; this, along with high food prices, restrains a faster recovery in domestic demand.
“Activity in the non-oil economy will remain curbed by high levels of violence, and social unrest, as well as the threat of fresh COVID-19 flare-ups with remaining mobility restrictions being lifted guardedly because of low vaccination rates — just about 2 percent of the population, had been fully vaccinated by the end of 2021,” the report notes.
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