The United Nations has said the Nigerian economy will grow by three percent in 2023 on the back of robust commodity trade and dynamic markets for consumer goods and services.
He stated that high inflation and energy supply problems are affecting the country’s economic growth. He revealed it in his report ‘The world economic situation and prospects for 2023’.
The report was produced by the United Nations Department of Economic and Social Affairs, in association with the United Nations Conference on Trade and Development and the five regional commissions of the United Nations: Economic Commission for Africa, Economic Commission for Europe, Economic Commission for Latin America and the Caribbean. Caribbean, Economic and Social Commission for Asia and the Pacific and Economic and Social Commission for Western Asia.
He 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, taking growth to three percent. cent in 2023”.
The UN projects that aggregate economic growth will weaken to 3.8% in 2023 from 4.1% in 2022 in Africa due to subdued investment and deteriorating export volumes.
It said price levels that rose significantly in Africa due to a global spike in inflation in 2022 are expected to moderate in 2023. According to the agency, the share of African countries experiencing double-digit inflation has risen to 40 percent. in 2022 due to supply chain disruptions and the aftermath of the war in Ukraine, which made essential food and energy more expensive.
It read: “To combat inflation and exchange rate pressure, about two-thirds of African countries raised domestic policy interest rates in 2022. Most countries are likely to raise rates further in 2023 in parallel with the projected monetary stance of the Federal Reserve in the United States. United States and the European Central Bank.
According to the New York-based agency, fiscal positions in Africa have deteriorated as governments tried to protect lives and livelihoods during the pandemic with average public debt rising to more than 60 percent of GDP and is likely to remain so in 2023.
Furthermore, he revealed that African countries will have difficulties with the repayment of the principal of around $11 billion in Eurobonds by 2024 due to weak currencies.
He said: “Although some large African economies have lower levels of public debt on average, they will continue to see high and rising debt service costs.
“Given higher interest rates, weaker currencies against the dollar, and lower capital inflows, several African countries will face challenges in servicing and rolling over a large volume of debt, especially in 2024, when the repayment of the Principal of around $11 billion in Eurobonds will be owed.
“Eurobond issuance has become more difficult for African governments, and yields in secondary markets have risen substantially, pointing to rising borrowing costs in the future.”
With 17 African countries up for presidential and parliamentary elections, the UN added that growing popular dissatisfaction in many countries, fueled by worsening socio-economic conditions, including subdued wage growth, rising cost of living and concerns about the food security, could be a challenge for the incumbents or new administrations.
In early January, the World Bank revealed that Nigeria’s economy would grow by 2.9 percent in its World Economic Outlook report.
Recently, Minister of Finance, Budget and National Planning Zainab Ahmed revealed that the country did not plan to explore the bond market in 2023 due to an unfavorable market.
She said: “In 2023, we are not in the bond market. If we can get back to early 2021 rates, then we may consider going back to the bond market. But we’re constantly monitoring the bond market, we’re monitoring the performance of our bonds, and when it gets to that comfortable level, we’ll explore it.”