The World Bank has predicted that Nigeria’s growth would decelerate from 3.3 per cent in 2022 to 2.9 per cent in 2023.
The bank noted, in a report titled, ‘Africa’s Pulse: An analysis of issues shaping Africa’s economic future (October 2023 | Volume 28), that the country’s oil production had remained below OPEC+ quota amid capacity issues and lower international oil prices.
The World Bank further noted that non-oil economic activity, particularly industry and services still supported growth, policy actions to remove fuel subsidies and unify the exchange rates might be weighing on these activities in the short term.
It also said that activity in Nigeria’s manufacturing and services sector contracted in August.
“Weak business confidence and rising input costs are driving the contraction of activity,” the bank said, stressing that business confidence appears to have weakened in Nigeria.
On the reforms by the administration of President Bola Tinubu, the global bank revealed that the purchasing power of households was expected to suffer in the short term.
It said: “The incoming Tinubu administration implemented a series of reforms that included the removal of fuel subsidies and the devaluation and unification of the exchange rate system. Petroleum prices have more than tripled since the subsidies were lifted at the end of May.
“The naira has weakened by nearly 40 per cent against the US dollar since the mid-June devaluation. Although these measures are intended to improve the fiscal and external accounts of the nation, their inflationary effects in the near term can erode the purchasing power of households and weigh on economic activity.”
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