The World Bank has downgraded Nigeria’s 2023 growth by 0.3 percentage point to 2.9 percent from its previous projection of 3.2 percent.
The Bank said the downgrade was due to production challenges in the oil sector, rising insecurity, and flooding.
The World Bank disclosed this in a report titled : January 2023 Global Economic Prospects.
The report stated: ““In Nigeria, growth is projected to decelerate to 2.9 percent in 2023 and remain at that pace in 2024 barely above population growth.
“A growth momentum in the non-oil sector is likely to be restrained by continued weakness in the oil sector.
“Existing production and security challenges and a moderation in oil prices are expected to hinder a recovery in oil output.
“Policy uncertainty, sustained high inflation, and rising incidence of violence are anticipated to temper growth. Growth in agriculture is expected to soften because of the damage from last year’s floods.
“As fiscal position is expected to remain weak because of high borrowing costs, lower energy prices, a sluggish growth of oil production, and a subdued activity in the non-oil sectors.”
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The Bank also expected global growth to decline to 1.7 percent in 2023 from 2.0 percent previous projection due to global recessions caused by the pandemic and the global financial crisis.
It stated: “Global growth is expected to decelerate sharply to 1.7 percent in 2023, the third weakest pace of growth in nearly three decades, overshadowed only by the global recessions caused by the pandemic and the global financial crisis.
“This is 1.3 percentage points below previous forecasts, reflecting synchronous policy tightening aimed at containing very high inflation, worsening financial conditions, and continued disruptions from the Russian Federation’s invasion of Ukraine.
“The United States, the euro area, and China are all undergoing a period of pronounced weakness, and the resulting spillovers are exacerbating other headwinds faced by emerging market and developing economies (EMDEs).
“The combination of slow growth, tightening financial conditions, and heavy indebtedness is likely to weaken investment and trigger corporate defaults.
“Further negative shocks such as higher inflation, even tighter policy, financial stress, deeper weakness in major economies, or rising geopolitical tensions could push the global economy into recession.
“In the near term, urgent global efforts are needed to mitigate the risks of global recession and debt distress in EMDEs. Given limited policy space, it is critical that national policy makers ensure that any fiscal support is focused on vulnerable groups, that inflation expectations remain well anchored, and that financial systems continue to be resilient.
“Policies are also needed to support a major increase in EMDE investment, which can help reverse the slowdown in long-term growth exacerbated by the overlapping shocks of the pandemic, the invasion of Ukraine, and the rapid tightening of global monetary policy.
This will require new financing from the international community and from the repurposing of existing spending, such as inefficient agricultural and fuel subsidies.”