World Bank, UN see recovery for Nigeria’s economy in 2024

The World Bank and the United Nations (UN) have projected that Nigeria’s economy will recover in 2024 on the back of its policy reforms.

According to the World Bank’s latest report titled ‘Global Economic Prospect: Subdued Growth, Multiple Challenges’, the country’s GDP will rise by 3.3 percent this year, up from a projected 2.9 percent growth for 2023.

The UN also expects it to see a slight improvement in its GDP growth to 3.1 percent from an estimate of 3.0 percent.

“Growth in Nigeria is projected at 3.3 percent this year and 3.7 percent in 2025 — up 0.3 and 0.6 percentage points, respectively, since June — as macro-fiscal reforms gradually bear fruits. The baseline forecast implies that per capita income will reach its pre-pandemic level only in 2025,” the World Bank said.

It said growth is expected to be driven mainly by agriculture, construction, services, and trade, as inflation should ease out gradually as a result of the exchange rate reforms and the removal of fuel subsidies.

“In Nigeria, the region’s largest economy, growth softened to an estimated 2.9 percent in 2023. While services growth weakened markedly in 2023, partly driven by a disruptive currency demonetisation policy in the first quarter of 2023, annual oil production increased after a notable decline in previous years,” it added.

The UN added that policy reforms enacted by the government of Nigeria in 2023, especially in the hydrocarbon sector, have contributed to a moderate improvement in the country’s growth prospects for 2024, with GDP growth forecast at 3.1 percent.

“However, ballooning public debt, persistent inflation and a rising cost of living, together with a weak business environment, will pose a downward risk to growth prospects.

“Efforts to increase in-country oil refining capacity would likely reduce domestic fuel costs in 2024 and beyond. Energy subsidy reforms in Nigeria, Angola and Gambia, as well as tax hikes in Kenya, Ghana and South Africa, aim to provide the Government with some relief from tight fiscal spaces.”

Last year was tough for Africa’s most populous nation as naira scarcity, the removal of petrol subsidy and naira devaluation increased inflation pressures, poverty and unemployment in the country.

The country’s GDP rose marginally by 2.54 percent (year-on-year) in the third quarter of last year from 2.51 percent in Q2 and 2.25 percent in the same period of 2022, according to the National Bureau of Statistics.

In December, headline inflation increased to 28.92 percent, marking the fastest annual pace in two decades.

Foreign investments plunged to $654.7 million in Q3, the lowest in at least 11 years, from $1.03 billion in the previous quarter. The country’s currency depreciated by 49.1 percent to N907.1 at the end of 2023 from N461.6 in 2022 on the official market.