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World Bank revises Nigeria’s growth down to 2.1% in 2019

World Bank in talks with Nigeria for fresh $2.5 bn loan

The World Bank on Tuesday revised Nigeria’s real Gross Domestic Product (GDP) down to 2.1 percent in 2019, from its earlier projection of 2.2 percent in January. GDP is the monetary measure of the nation’s overall economic activity.

In its Global Economic Prospects released on Tuesday, the World Bank said growth in Angola, Nigeria, and South Africa, the three largest economies of the region, has remained subdued in 2019. In Nigeria, the recovery in oil production has fallen short of expectations, as policy uncertainty constrains investment in new capacity, while weak domestic demand amid a challenging business environment has dampened non-oil growth.

Reacting to the growth forecast by the World Bank, Ayodele Akinwunmi, head of research at FSDH Merchant Bank Limited, said Nigeria has the capacity to grow much more than the World Bank’s predictions.

He said this should be a challenge to Nigerian government to implement policies that will support and exceed the growth forecast.

The report stated that the recovery in sub-Saharan Africa fell short of forecasts at the beginning of the year, with weakening external demand, supply disruptions, and elevated policy uncertainty weighing on activity in major economies. Growth in the region is expected to pick up to a lower-than-expected 2.9 percent this year.

According to the World Bank, regional growth is expected to accelerate to 3.3 percent in 2020, assuming that investor sentiment will improve toward some of the large economies of the region, that oil production will recover in large exporters, and that robust growth in non-resource-intensive economies will be underpinned by continued strong agricultural production and sustained public investment. While per capita GDP is expected to rise in the region, it will be insufficient to significantly reduce poverty. Even in areas where pushing back poverty has made inroads, economic growth has been concentrated in urban areas, providing little benefit to the rural poor.

The Washington-based bank said growth in Nigeria is anticipated to edge up to 2.2 percent in 2020, but foreign exchange restrictions, supply disruptions in the oil sector, and a lack of needed reforms are seen as constraints to stronger growth.

Elsewhere in the region, growth is expected to rise to 4.9 percent next year. The recovery among industrial commodity exporters will be supported by investment in new oil and gas capacity in Cameroon and Ghana, and increased mining in metal exporting countries, including Democratic Republic of the Congo and Guinea.

The outlook, the World Bank said, is subject to several downside risks. A sharper-than-expected deceleration of activity in key trading partners – China, the Euro Area, and the United States – could weigh on growth. Lower-than expected commodity prices would further pose a risk to the growth outlook, it said.

Global economic growth is forecast to ease to a weaker-than-expected 2.6 percent in 2019 before inching up to 2.7 percent in 2020. Growth in emerging market and developing economies is expected to stabilise next year as some countries move past periods of financial strain, but economic momentum remains weak.

Emerging and developing economy growth is constrained by sluggish investment, and risks are tilted to the downside. These risks include rising trade barriers, renewed financial stress, and sharper-than-expected slowdowns in several major economies, the World Bank said in its June 2019 Global Economic Prospects: Heightened Tensions, Subdued Investment. Structural problems that misallocate or discourage investment also weigh on the outlook.

“Stronger economic growth is essential to reducing poverty and improving living standards,” said World Bank Group President David Malpass.

“Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential. It’s urgent that countries make significant structural reforms that improve the business climate and attract investment. They also need to make debt management and transparency a high priority so that new debt adds to growth and investment,” Malpass said.