Nigeria will move from recession to 1.2% economic growth this year – World Bank

The World Bank has upgraded its forecast for Nigeria’s economic growth to 1.2 percent for 2017 on the basis of the decreased militant activities in the Niger Delta which has allowed improved oil production.

In its June 2017 Global Economic Prospects report, World Bank stated that Nigeria is forecast to move from recession to a 1.2 per cent growth rate in 2017, which would hike to 2.4 percent next year.

The Brenton Woods institution noted that “In Nigeria, militants’ attacks on oil pipelines decreased. The economic recession in Nigeria is receding. In the first quarter of 2017, GDP fell by 0.5 percent (y/y), compared with a 1.7 percent contraction in the fourth quarter of 2016.

“The Purchasing Managers’ Index for manufacturers returned to expansionary territory in April (Figure 2.6.1), indicating growth in the sector after contraction in the first quarter. Oil exports are rebounding in Nigeria on the back of an uptick in oil production from fields previously damaged by militants’ attacks.

“Mining companies across the region are resuming production and exports. In contrast, current account balances have remained under pressure in a number of non-resource intensive countries.”

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The World Bank also projected 2.6 percent economic growth for the Sub-Saharan African region this year which would increase to 3.2 percent in 2018.

It said, “Predicated on moderately rising commodity prices and reforms to tackle macroeconomic imbalances. However, per capita output is projected to shrink by 0.1 percent in 2017 and to increase to a modest 0.7 percent growth pace over 2018-19.

“At those rates, growth will be insufficient to achieve poverty reduction goals in the region, particularly if constraints to more vigorous growth persist.

“Growth in South Africa is projected to rise to 0.6 percent in 2017 and accelerate to 1.1 percent in 2018. Growth in non-resource- intensive countries is anticipated to remain solid, supported by infrastructure investment, resilient services sectors, and the recovery of agricultural production.

“Ethiopia is forecast to expand by 8.3 percent in 2017, Tanzania by 7.2 percent, Côte d’Ivoire by 6.8 percent, and Senegal by 6.7 percent.”

The World Bank forecasts held that global economic growth will strengthen to 2.7 percent in 2017 as a pickup in manufacturing and trade, rising market confidence, and stabilizing commodity prices allow growth to resume in commodity-exporting emerging market and developing economies.

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According to the bank, “Global financing conditions remain favourable and commodity prices have stabilized. Against this improving international backdrop, growth in emerging market and developing economies as a whole will pick up to 4.1 percent this year from 3.5 percent in 2016.

” Growth among the world’s seven largest emerging market economies is forecast to increase and exceed its long-term average by 2018. Recovering activity in these economies should have significant positive effects for growth in other emerging and developing economies and globally.

”Nevertheless, substantial risks cloud the outlook. New trade restrictions could derail the welcome rebound in global trade. Persistent policy uncertainty could dampen confidence and investment.

”Amid exceptionally low financial market volatility, a sudden market reassessment of policy-related risks or of the pace of advanced-economy monetary policy normalization could provoke financial turbulence.

” Over the longer term, persistently weak productivity and investment growth could erode long-term growth prospects in emerging market and developing economies that are key to poverty reduction .”

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