The World Bank’s Global Economic Prospects report for January 2024 has painted an optimistic picture for Nigeria, predicting a promising expansion of 3.3% in economic growth for the year.
Additionally, the report foresees the country’s per capita income reverting to pre-pandemic levels by 2025, signalling a resilient recovery from the challenges posed by the global health crisis.
Amidst a deceleration in economic growth estimated at 2.9% in 2023 across the Sub-Saharan African (SSA) region, challenges specific to Nigeria, such as elevated input prices for businesses, contributed to this slowdown.
Notably, major regional economies, including Nigeria, South Africa, and Angola, collectively experienced diminished growth rates, averaging 1.8% in 2023.
The improved economic outlook for Nigeria is attributed to the gradual realization of macro-fiscal reforms undertaken by the Nigerian government.
The World Bank’s projections reflect growth rates of 3.3% in 2024 and a further uptick to 3.7% in 2025, indicating an increase of 0.3 and 0.6 percentage points since June. The report suggests that per capita income will return to pre-pandemic levels only by 2025.
According to the report, the key drivers of this economic expansion include the agriculture, construction, services, and trade sectors, which are poised to significantly contribute to Nigeria’s overall economic growth in the forthcoming years.
In light of inflation concerns, the World Bank report anticipates a gradual easing of inflationary pressures linked to the impact of exchange rate reforms and the removal of fuel subsidies.
Structural reforms are anticipated to enhance fiscal revenue over the forecast period, potentially stabilizing inflation.
Nigeria experienced a surge in annual inflation rates, reaching 28.20% in November 2023, a significant increase of 6.73 percentage points compared to November 2022’s rate of 21.47%.
While acknowledging the optimistic projections, the World Bank emphasized the necessity for continued vigilance and policy adjustments to navigate potential challenges and uncertainties prevailing on the global economic horizon.
