World Bank projects 2.9% GDP growth for Nigeria’s economy

The World Bank on Wednesday projected a 2.9 percent growth in Gross Domestic Product (GDP) for the Nigerian economy this year.

The World Bank stated this in its latest Global Economic Prospects report released in Washington, the United States.

It noted that Nigeria’s growth weakened to 3.1 percent in 2022 and would further slow down to 2.9 percent this year.

The Bretton Wood institution identified low oil output, insecurity, petrol subsidies, and forex scarcity, among others as the major factors that would hamper the country’s economic growth this year.

The bank also expects policy uncertainty, sustained high inflation, and rising incidence of violence to temper growth.

The report read: “Growth in Nigeria—the region’s largest economy—weakened to 3.1 percent in 2022, a 0.3percentage point downgrade from the June projection. Oil output dropped to 1 million barrels per day, down by over 40 percent compared to its 2019 level, reflecting technical problems, insecurity, rising production costs, theft, lack of payment discipline in joint ventures, and persistent underinvestment, partly because of the diversion of oil revenues to petrol subsidies, estimated at over 2 percent of GDP in 2022 (NEITI 2022; World Bank 2022t).

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“A strong recovery in non-oil sectors moderated in the second half of the year as floods and surging consumer prices (annual inflation surpassed 21 percent for the first time in 17 years) disrupted activity and depressed consumer demand. Persistent fuel and foreign exchange shortages, with the naira depreciating by over 30 percent last year in the parallel market, further dampened economic activity.

“In Nigeria, growth is projected to decelerate to 2.9 percent in 2023 and remain at that pace in 2024—barely above population growth. Growth momentum in the non-oil sector is likely to be restrained by continued weakness in the oil sector. Existing production and security challenges and moderation in oil prices are expected to hinder a recovery in oil output.

“Policy uncertainty, sustained high inflation, and rising incidence of violence are anticipated to temper growth. Growth in agriculture is expected to soften because of the damage from last year’s floods.

“The fiscal position is expected to remain weak because of high borrowing costs, lower energy prices, a sluggish growth of oil production, and a subdued activity in the non-oil sectors.”

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