Nigeria’s economy to grow 3% in 2023: UN

The Nigerian economy is expected to grow 3 percent in 2023, the United Nations (UN) has said.

The UN, in its 2023 World Economic Situation and Outlook report posted on its website, said high inflation and energy supply problems are affecting growth in Nigeria.

“But the economy will benefit from strong commodity trade and dynamic markets for consumer goods and services, driving growth to 3 percent in 2023,” he said.

The global body said aggregate output in Africa is expected to remain subdued amid a volatile and uncertain global environment that exacerbates domestic challenges.

“Aggregate economic growth is estimated to weaken to 3.8 percent in 2023 from 4.1 percent in 2022, due to subdued investment and deteriorating export volumes,” it said.

The report noted that in 2023, growth is expected to pick up in East Africa and West Africa while stabilizing in Central Africa.

According to the report, favorable export prices will benefit commodity exporters, but slowing global demand will pose challenges.

“Commodity exporters in Africa will likely face weaker market conditions given the expected global economic slowdown. However, export prices are likely to remain high, amid

fierce competition for the continent’s primary products.

“In 2023, commodity prices are expected to decline but remain at historically high levels. Despite the volatility in energy, metals and minerals, commodity exporters are expected to continue to benefit from a general terms-of-trade boost in their external balances in the near term,” he said.

regional overview

The UN explained that African mineral exporters Botswana, the Democratic Republic of the Congo, Namibia, Nigeria, Sierra Leone, South Africa, the United Republic of Tanzania, Zambia and Zimbabwe are likely to receive increased investment, while Europe looks for alternative sources of critical minerals. , metals and precious stones.

The report says inflationary pressures are expected to ease in 2023 as monetary policy tightens across the continent.

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“Low and declining growth in per capita income is estimated to fall to 1.4% in 2023 after an average of 1.6% in 2021 and 2022 will keep poverty entrenched and prevent countries from accelerating progress towards the SDGs.

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“In line with the global rebound in inflation, price levels have risen significantly in African countries, but are expected to moderate in 2023,” the report added.

He said the proportion of African countries experiencing double-digit inflation has risen to 40 percent by 2022, driven mainly by supply chain disruptions and the fallout from the

war in Ukraine, which made essential food and energy more expensive.

“To combat inflation and exchange rate pressure, around two-thirds of African countries raised domestic policy interest rates in 2022. Most countries are likely to further increase rates in 2023 in parallel with the projected monetary stance of the Federal Reserve in the United States and the European Central Bank,” the report says.

tax concerns

Meanwhile, the report says that fiscal positions in Africa have deteriorated as governments seek to protect lives and livelihoods during the pandemic.

The UN noted that the average public debt has risen to more than 60 percent of GDP and is likely to remain at this level in 2023.

Such a magnitude, according to the report, was last seen in the early 2000s, just before the launch of the Heavily Indebted Poor Countries Initiative.

Given higher interest rates, the report added that with weaker currencies against the dollar and lower capital inflows, several African countries will face challenges in repaying and rolling over a large volume of debt, especially in 2024, when the principal repayment of about $11 billion on the Eurobonds will be owed.

“The pressure to implement economic reforms and cut government spending will intensify in several African countries. However, political uncertainty due to upcoming elections in some nations will likely delay major changes,” he said.

According to the report, downside risks dominate the African economic outlook for 2023.

“Persistently high global inflation may prompt faster and greater central bank tightening in major advanced economies, depressing global demand, raising international and domestic borrowing costs, and reducing investment on the continent.

“A global slowdown and tighter financial conditions, as well as a decline in official development assistance (ODA) could hamper debt sustainability and efforts to protect the most vulnerable segments of society.

“Unexpected capital outflows could disrupt economies with high external financing needs,” the report said.

He further explained that an escalation of the war in Ukraine and the prolonged interruption of Russian exports could accentuate the current inflationary pressures on food and energy prices, which would aggravate concerns about the affordability of food for vulnerable populations and could cause social discontent.

“A severe and widespread slowdown in the global economy is on the horizon amid high inflation, aggressive monetary tightening, and rising

uncertainties Many economies are at risk of falling into recession, having barely recovered from the shock of the pandemic,” said United Nations Secretary-General António Guterres in the report’s foreword.

He said developing countries’ fiscal space is under siege from depreciating exchange rates, high borrowing costs and rising debt.

“While controlling inflation remains a key near-term objective, policymakers must also consider the trade-offs with slower growth, job losses, and international contagion effects.

“This is not the time for short-term thinking or knee-jerk fiscal austerity that exacerbates inequality, increases suffering and could put the SDGs further out of reach. These unprecedented times call for unprecedented action,” he said.