World Bank predicts 3.3% economic expansion for Nigeria in 2024

…Warns of economic challenges in Nigeria, South Africa, others

By Sodiq Adelakun

The World Bank has predicted that Nigeria’s economy will grow by 3.3 percent this year, according to its recent Global Economic Prospect (GEP) report.

This projection is 0.4 percentage points higher than the 2.9 percent growth the country experienced last year.

While Nigeria’s growth forecast is slightly lower than the projected 3.8 percent expansion for sub-Saharan Africa (SSA), it is significantly higher than the estimated global average of 2.3 percent.

The World Bank’s latest projections for 2024 and 2025 are also higher than their previous forecasts in June, which were 3 percent and 3.1 percent respectively. This indicates the bank’s growing confidence in Nigeria’s economic prospects, particularly since the implementation of downstream oil and foreign exchange reforms in the middle of last year.

According to the report, Nigeria’s inflation will “gradually ease as the effects of last year’s exchange rate reforms and removal of fuel subsidies fade,” with the structural reforms expected to boost fiscal revenue.

“Growth in SSA is expected to accelerate to 3.8 percent in 2024 and further to 4.1 percent in 2025 as inflationary pressures fade and financial conditions ease.

“The projections for regional growth in 2024 and 2025 have changed little from June forecasts, but these aggregates mask a mix of upgrades and downgrades at the country level.

“While growth in the largest economies in SSA is expected to lag the rest of the region, non-resource-rich economies are forecasted to maintain a growth rate above the regional average.

“Excluding the three largest SSA economies, growth in the region is expected to accelerate from 3.9 percent in 2023 to 5 percent in 2024 and a further 5.3 percent in 2025,” the report said about Africa.

It was gathered that on the first day of this year, President Bola Ahmed Tinubu signed the N28.7 trillion 2024 appropriation bill into law with a 3.76 percent projected economic growth rate.

Meanwhile, the World Bank has highlighted that the largest economies in Sub-Saharan Africa, namely Nigeria, South Africa, and Angola, will pose challenges to the region’s growth in 2024.

This observation was made in the Global Economic Prospects for 2024 report by the Bretton Wood Institute, which also predicts the global economy to experience its weakest performance in thirty years.

The report projected that the Sub-Saharan Africa region will witness a growth rate of 3.8 percent in 2024 and 4.1 percent in 2025, primarily driven by a decrease in inflation and relaxed monetary policies.

Furthermore, the report noted that the slow growth region’s largest economies Nigeria, South Africa and Angola will drag down overall growth in the region. Excluding the region’s largest economies, the Sub-Saharan region will see an uptick in growth from its projected 3.8 percent in 2024 and 4.1 percent in 2025 to 5 percent in 2024 and 5.3 percent in 2025.

It stated, “Excluding the three largest SSA economies, growth in the region is expected to accelerate from 3.9 percent  in 2023 to 5 percent in 2024, and a further 5.3 percent in 2025.

“Although waning inflationary pressures should allow for a gradual easing of interest rates, thereby bolstering private consumption and investment during the forecast period, the weaknesses in the region’s three largest economies will limit the pickup in SSA’s growth.”

The bank pegged economic growth in Nigeria for 2024 at 3.3 percent and 3.7 percent in 2025. It noted that the cash scarcity and low oil production at the beginning of the year badly hurt the economy in 2023 but expects inflation in 2024 to ease as new reforms bear fruits.

For South Africa whose economy in 2023 was bedraggled by a surge in power cuts and transport bottlenecks greatly undermining the manufacturing sector, growth was forecasted at 1.3 percent and 1.5 percent in 2024 and 2025 respectively.

Nigeria and South Africa are not only the SSA’s biggest economies but Africa’s biggest economies. When combined, they make up about 43 percent of Africa’s 2.06 trillion GDP. However, these continental giants have been faced with a series of economic woes in recent times.

Nigeria’s economic growth in 2023 fell short of expectations, with GDP only increasing by 2.52 percent in the third quarter due to the disruptive effects of a currency demonetisation policy and ongoing reforms.

However, there was a positive development in annual oil production, which rebounded after a decline in previous years.

Meanwhile, South Africa’s economy has been hindered by an energy crisis, transportation bottlenecks, weak job creation, high prices, and tight monetary policies. Power outages reached unprecedented levels in 2023, severely impacting manufacturing and mining production..