The World Bank Group has once again lowered its growth projection for the Nigerian economy, citing a weak oil sector as its main reason.
This was contained in the bank’s Global Economic Outlook report released on Tuesday.
According to the projection, Nigeria’s economy will slow further to 2.9 percent in 2023 and is not expected to record any growth in 2024.
Specifically, the lender said Nigeria’s growth weakened to 3.1 percent in 2022 and would slow further to 2.9 percent this year.
The Washington-based bank said growth momentum in the non-oil sector is likely to be constrained by continued weakness in the oil sector, which would negatively affect Nigeria’s oil-based economy.
The Bank pointed out that a series of factors, such as low oil production, insecurity, gasoline subsidies, and a shortage of foreign currency, among others, hinder the country’s growth.
The report said: “Growth in Nigeria, the region’s largest economy, weakened to 3.1 percent in 2022, down 0.3 percentage points from the June projection. Oil production dropped to 1 million barrels per day, a reduction of more than 40% compared to its 2019 level, reflecting technical problems, insecurity, rising production costs, theft, lack of discipline from payment in joint ventures and persistent lack of investment, partly due to the diversion of oil revenues to gasoline subsidies, estimated at more than 2 percent of GDP in 2022 (NEITI 2022; World Bank 2022t).
“A strong recovery in the non-oil sectors moderated in the second half of the year as flooding and rising consumer prices (annual inflation topped 21 percent for the first time in 17 years) disrupted activity and depressed the economy. customer demand. Persistent fuel and foreign exchange shortages, with the naira depreciating by more than 30 percent last year on the parallel market, further dampened economic activity.
The bank further noted that the meager economic growth of 2.9% in 2023 will be barely above population growth, which is often said to be around 2.5% in previous reports.
The latest projection came just three weeks after the bank lowered its economic projection for Nigeria’s economic growth from 3.8% to 3.1%.
The report, which was prepared by the World Bank’s Nigeria Development Update, said Nigeria’s economy needs to grow faster to reduce poverty.
The report noted that inflation had risen to 21.1 percent by October 2022, pushing a further five million Nigerians into poverty since early 2022.
He further stated that despite higher oil export revenues, official reserves have fallen and the foreign exchange market is severely distorted, undermining the business environment and investment.
He warned that weaknesses in the macroeconomic policy framework are suppressing growth and making Nigeria more vulnerable to shocks.
“Nigeria has the option to implement critical macroeconomic and structural reforms that can reduce vulnerabilities to the crisis and increase growth. Doing so will increase per capita income, sustainably reduce poverty and deliver better life outcomes for many Nigerians.
“Unusual business elections are urgently needed to avoid a scenario where up to 80 million Nigerians of working age are without a full-time job by 2030 and up to 23 million more Nigerians could live in extreme poverty,” said Shubham Chaudhuri. , World Bank Country Director for Nigeria.
Alex Sienaert, World Bank Principal Economist for Nigeria and co-author of the Report, noted that if Nigeria chooses to pursue reforms that stabilize its macro-fiscal policy setup and support investment, this would be transformational for 80 million poor Nigerians, for Nigeria as a country as a whole. , and for Africa.