Post Views: 597 The World Bank, on Wednesday announced a cut in the growth forecast of Nigeria’s 2018 Gross Domestic Product (GDP) by 0.2% to 1.9%. Ju...
The World Bank, on Wednesday announced a cut in the growth forecast of Nigeria’s 2018 Gross Domestic Product (GDP) by 0.2% to 1.9%.
Judging by this slower-than-expected growth in Nigeria, as well as Angola and South Africa, the three biggest economies on the continent, the World Bank in its Africa Pulse report, also revised the economic growth forecast for sub-Saharan Africa this year to 2.7%, from its earlier 3.1% predicted in the June Global Economic Prospects publication, up from 2.3% in 2017. The situation is not helped by the external environment fast becoming less favorable, amid mounting global trade risks and weakening demand for the area’s products.
According to Albert Zeufack, the bank’s chief economist for Africa, urged governments on the continent to stop wasting money and rather boost productivity to support its economic recovery.
The bank drew attention to the high public debt in some countries in the region, combined with weakening currencies and rising interest rates, all of which it warned, could endanger their ability to service those debts.
“Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt,” Zeufack said.
The bank also cut its estimate for South Africa’s GDP expansion from 1.4% to 1% this year, and sees growth in 2019 remaining subdued as high unemployment constrains domestic demand.
The region, which had posted a fairly fast average growth rate in the years leading up to 2015, suffered a loss of momentum in economic output after commodity prices crashed in 2015-16.
Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture, the bank said.
The other countries in the region have been growing steadily this year, the bank said, including those not dependent on commodities, like Ivory Coast, Kenya and Rwanda.
According to the report, “the road ahead is bumpy. The tightness of oil supply suggests that oil prices are likely to remain elevated through the rest of the year and into 2019. Metals prices have been lower than previously forecast and may remain subdued in 2019 and 2020 amid muted demand, particularly in China.”
Nigeria’s National Bureau of Statistics (NBS), on August 27, 2018 published the Q2 GDP data showing a 0.45% slower growth from the 1.95% recorded in Q1 (READ MORE).
Also, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), had in a communique at the end of their meeting on September 24, 2018, expressed concerns that the nation’s 2017 exit from recession is under threat. This, they noted, is clear from the latest data showing a growth slowdown in GDP, following which the Federal Government was enjoined “to take advantage of the current rising oil prices to rebuild fiscal buffers, strengthen government finances in the medium term and reverse the current trend of decline in output growth.”