Tuesday, January 16, 2018 /10:48AM FDC
World Bank forecasts that Nigeria’s economic growth will spike to at least 2.5% in 2018 from a 1% growth in 2017 on the back of improved commodity prices, investments and trade. The upward revision is based on the expectations of a stability in Nigeria’s oil production and a surge in non-oil sector growth due to government reforms.
According to the World Bank’s January 2018 Global Economic Prospect report, Nigeria’s Gross Domestic Product (GDP) is expected to grow further by 2.8% in 2019 and 2020.
Growth in Sub-saharan Africa is projected to increase to 3.2% in 2018 and 3.5% in 2019 due to firming commodity prices and strengthening domestic demand. However, expected growth will be below pre-crisis average, which is indicative of a struggle of large economies boosting investments.
The regional outlook for Sub-Saharan Africa is subject to external and domestic risks. Any unexpected activity in Europe and the US, and sudden slowdown in China’s economy could have a negative impact on the region. Futhermore, excessive external borrowing without forward looking buget management and steeper than expected tightening of global financial conditions, could hurt growth.
Global economic growth is forecast to surge to 3.1% in 2018.
Analysis & Outlook
The election timetable has been released. Accordingly, we expect increased government spending in the run-up to elections. This will be favourable for growth. On the other hand, investors may adopt the wait and see approach due to political uncertainties.
The economy remains largely vulnerable to commodity shocks. Lower oil prices, or a fall in domestic production due to militant activities in the Niger Delta region will weigh on economic activity, and could stifle economic growth. Any policy uncertainty will be unfavourable for growth as it could hurt investor confidence and deter investments.