World Bank forecasts slight fall in Nigerian growth as a result of Ukraine war and falling Chinese demand

WORLD Bank officials have lowered their economic growth forecast for Nigeria in 2023 to 3.2% from an earlier figure of 3.3% as a result of the general global slowdown and other key factors such as reduced Chinese demand for African products.

With the end of the pandemic-induced shutdown and the increased demand for crude oil, the World Bank had predicted decent growth in the Nigerian economy. However, of late, there are signs that several factors, such as the Russia-Ukraine war and declining demand from China for commodities produced in Africa, is starting to have a telling effect.

Citing similar conditions, the World Bank also projected that the sub-Saharan African region will record a lower economic growth of 3.3% in 2022 from the 4.1% recorded in 2021. Consequently, the World Bank called on the governments in the sub-Saharan African region to urgently implement measures to restore macro-economic stability and protect the poor in a context of slow growth, high inflation

These forecasts were contained in the October edition of the World Bank’s Africa’s Pulse, a biannual analysis of the near-term regional macroeconomic outlook, and economic growth in sub-Saharan Africa.  Highlighting the growth factors for Nigeria’s economy, the World Bank said: “The Nigerian economy is projected to slow in 2023, down to 3.2% from 3.3% and persist at this level the following year.

"Growth will be supported mainly by the rebound in private consumption, prompted mostly by accommodative monetary policy as inflationary pressures subside. Private consumption expenditure is forecast to decrease this year and grow next year and this performance will likely continue in 2024. On the production side, growth in 2023 will be supported by industry, with the growth of 5.1%, with the mega-refinery project.”

On its growth forecast for the sub-Saharan African region, the World Bank added: “Economic growth in sub-Saharan Africa is set to decelerate from 4.1% in 2021 to 3.3% in 2022, a downward revision of 0.3 percentage points since April’s Pulse forecast, mainly as a result of a slowdown in global growth, including flagging demand from China for commodities produced in Africa.

“The war in Ukraine is exacerbating already high inflation and weighing on economic activity by depressing both business investments and household consumption. As of July 2022, 29 of 33 countries in sub-Saharan Africa with available information had inflation rates over 5%, while 17 countries had double-digit inflation.”