World Bank projects Nigeria’s economy to rebound by 2.4% in 2021

The World Bank says Nigeria’s economy is expected to grow by 2.4 per cent in 2021 owing to support by the service sector.

The Bretton Woods Institution said this on Wednesday in its October edition of Africa’s Pulse, the bank’s twice-yearly economic update for the region.

It is titled: “Climate Change Adaptation and Economic Transformation in Sub-Saharan Africa”.

According to the publication, Sub-Saharan Africa (SSA) is set to emerge from the 2020 recession sparked by the COVID-19 pandemic with growth expected to expand by 3.3 per cent in 2021.

It also said that Angola would grow by 0.4 per cent, after five consecutive years of recession.

South Africa was projected to grow by 4.6 per cent, reflecting better performance in services, industry, and somewhat agriculture.

“Excluding South Africa and Nigeria, the rest of SSA is rebounding faster at a growth rate of 3.6 per cent in 2021, with non-resource-rich countries like Côte d’Ivoire and Kenya expected to recover strongly at 6.2 and 5.0 per cent, respectively”

According to it, the 3.3 per cent expansion in the region is one per cent higher than the April forecast, a rebound that is currently fueled by elevated commodity prices, a relaxation of stringent pandemic measures and recovery in global trade.

It said that a positive trend was that African countries had seized the opportunity of the COVID-19 crisis to foster structural and macroeconomic reforms.

Several countries, it said, had embarked on difficult, but necessary structural reforms, such as the unification of exchange rates in Sudan, fuel subsidy reform in Nigeria and the opening of the telecommunications sector to the private sector in Ethiopia.

The Pulse, however, said that in spite of the expansion, the region remained vulnerable given the low rates of vaccination on the continent, protracted economic damage and a slow pace of recovery.

It said that growth for 2022 and 2023 would also remain just below four per cent, continuing to lag the recovery in advanced economies and emerging markets and reflecting subdued investment in SSA.

“Additionally, thanks to prudent monetary and fiscal policies, the region’s fiscal deficit, at 5.4 per cent of Gross Domestic Product (GDP) in 2021, is expected to narrow to 4.5 per cent of GDP in 2022 and three per cent of GDP in 2023.”

“However fiscal discipline, combined with limited fiscal space, has prevented African countries from injecting the level of resources required to launch a vigorous policy response to COVID-19.”

The publication indicates that apart from mounting fiscal pressures and rising debt levels as they implement measures for a sustainable and inclusive economic recovery, SSA countries were also faced with worsening impacts of climate change.

The bank, however advised that just as the countries have used the crisis to introduce reform measures, they should also harness the opportunity to make sustainable, resilient transitions toward low-carbon economies.

This is so it could provide long-term benefits in the form of reduced environmental hazards as well as new economic development openings.

Mr Albert Zeufack, Chief Economist for Africa at the World Bank, said that fair and broad access to effective and safe COVID-19 vaccines was key to saving lives and strengthening Africa’s economic recovery.

“Faster vaccine deployment would accelerate the region’s growth to 5.1 per cent in 2022 and 5.4 per cent in 2023—as more containment measures are lifted, boosting consumption and investment.”