World Bank Foresees 2.9% GDP Growth for Nigeria in 2023
The World Bank has released its latest Africa’s Pulse report, predicting that Nigeria’s Gross Domestic Product (GDP) will grow by 2.9% in 2023. This forecast comes amidst an uncertain economic recovery in Sub-Saharan Africa, where the overall economic growth rate is expected to decelerate from 3.6% in 2022 to 2.5% in the current year. Nigeria’s projection of 2.9% growth is relatively positive, while South Africa’s GDP is expected to grow by only 0.5% in 2023 due to energy and transportation challenges.
The report attributes Nigeria’s and Angola’s growth forecasts of 2.9% and 1.3%, respectively, to lower international prices and currency pressures affecting both oil and non-oil activities.
The World Bank’s Africa’s Pulse is a bi-annual publication that analyzes the short-term economic prospects and current development challenges of the African continent, as well as special development topics.
However, the report highlights challenges facing Sub-Saharan Africa, such as rising instability, weak growth in large economies, and lingering uncertainty in the global economy, which are impeding growth prospects in the region. Increased conflict and violence are impacting economic activity, and this rising fragility may be exacerbated by climate-related shocks.
The report also notes that in Sudan, economic activity is expected to contract by 12% due to internal conflict, which is halting production, destroying human capital, and crippling state capacity. Furthermore, per capita growth in Sub-Saharan Africa has not increased since 2015. The region is projected to contract at an annual average per capita rate of 0.1% over 2015-2025, potentially marking a lost decade of growth following the 2014-15 plunge in commodity prices.
World Bank Chief Economist for Africa, Andrew Dabalen, emphasizes that the poorest and most vulnerable populations in the region continue to bear the economic brunt of this slowdown. Weak growth leads to slow poverty reduction and poor job growth, which is particularly concerning with up to 12 million young Africans entering the labor market annually in the region.
The report also provides some bright spots, stating that inflation is expected to decline from 9.3% in 2022 to 7.3% in 2023, and fiscal balances are improving in African countries with prudent macroeconomic policies. The Eastern African community (EAC) is forecasted to grow by 4.9% in 2023, while the West African Economic and Monetary Union (WAEMU) is expected to grow by 5.1%.
However, the report acknowledges that debt distress remains widespread, with 21 countries at high risk of external debt distress or in debt distress as of June. It also states that the current growth rates in the region are insufficient to create enough high-quality jobs to accommodate the increasing working-age population. The report calls for job opportunities for young people to drive inclusive growth and unlock the economic potential of the region.
The report identifies policies such as private sector reforms, vocational education, investment in education, support for early-stage business growth, and measures to improve learning in schools and access to jobs for women as potential solutions to overcome challenges and unleash job creation in Sub-Saharan Africa.