World Bank projects 4.6% growth for Nigeria’s economy

THE latest report by the World Bank as projected that Nigeria’s economic growth index would hit 4.6 per cent in 2016, even as it expected that economies would pick up in other oil exporting countries, on the assumption that oil prices will stabilise.

The group, in its January 2016 Global Economic Prospects obtained by The Guradian yesterday, also noted that weak growth among major emerging markets will weigh on global growth in 2016, but economic activity should still pick up modestly to a 2.9 per cent pace, from 2.4 per cent growth in 2015, as advanced economies gain speed.

The Sub-Saharan African region is forecast to accelerate to 4.2 per cent in 2016 from 3.4 per cent in 2015 as commodity prices stabilize. Economic activity will vary across Sub-Saharan Africa, with consumption growth remaining weak in oil exporting countries as fuel costs rise, while lower inflation in oil importing countries helps boost consumer spending.

Nigeria is forecast to expand 4.6 per cent after growing by 3.3 per cent last year while South Africa is expected to advance only modestly to 1.4 per cent growth from 1.3 per cent in the year just ended,” it noted.

The report described simultaneous weakness in most major emerging markets as a concern for achieving the goals of poverty reduction and shared prosperity because those countries have been powerful contributors to global growth for the past decade.
“Spillovers from major emerging markets will constrain growth in developing countries and pose a threat to hard-won gains in raising people out of poverty,” the report warns.

World Bank Group President Jim Yong Kim, said: “More than 40 per cent of the world’s poor live in the developing countries where growth slowed in 2015. Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies.”

Global economic growth was less than expected in 2015, when falling commodity prices, flagging trade and capital flows, and episodes of financial volatility sapped economic activity.

World Bank noted that firmer growth ahead would depend on continued momentum in high income countries, the stabilization of commodity prices, and China’s gradual transition towards a more consumption and services-based growth model.

Developing economies are forecast to expand by 4.8 percent in 2016, less than expected earlier but up from a post-crisis low of 4.3 per cent in the year just ended. Growth is projected to slow further in China, while Russia and Brazil are expected to remain in recessionin 2016. The South Asia region, led by India,is projected to be a bright spot.

World Bank Group Vice President and Chief Economist Kaushik Basu, said: “There is greater divergence in performance among emerging economies. Compared to six months ago, risks have increased, particularly those associated with the possibility of a disorderly slowdown in a major emerging economy.
“A combination of fiscal and central bank policies can be helpful in mitigating these risks and supporting growth.”

Growth in the East Asia and Pacific region is projected to continue to slow to 6.3 per cent in 2016 from a slightly less-than-expected 6.4 per cent in 2015. Growth in China is forecast to ease further to 6.7 percent in 2016 from 6.9 percent in 2015.
Growth in Europe and Central Asia is projected to rise to 3 per cent in 2016 from 2.1 per cent in the year just ended as oil prices fall more slowly or stabilize, the Russian Federation’s economy improves, and Ukraine recovers.

Economic activity in Russia is projected to contract by 0.7 percent in 2016 after shrinking by 3.8 percent in the year just ended. The western part of the region, which includes Bulgaria, Romania, Turkey and the Western Balkans, should grow moderately in 2016, buoyed by recovery in the Euro Area.

Growth in Middle East and North Africa is forecast to accelerate to 5.1 per cent in 2016 from 2.5 per cent in the year just ended, as the expected suspension or removal of economic sanctions against the Islamic Republic of Iran will allow that country to play a larger role in global energy markets.