The World Bank lowers its forecast for Nigeria’s economic growth.

The World Bank Group has once again revised downward its estimate of Nigeria’s economic growth, mostly due to a weakening oil industry.

This information was included in the bank’s report on Tuesday, Global Economic Prospects.

The estimate indicates that Nigeria’s GDP would continue to slow down, reaching 2.9% in 2023, and is not anticipated to expand at all in 2024.

The lender warned specifically that Nigeria’s GDP slowed to 3.1% in 2022 and would further slow to 2.9% this year.

According to the Washington-based bank, Nigeria’s oil-based economy would suffer as ongoing weakness in the oil industry will likely limit growth momentum in the non-oil sector.

The Bank said that a variety of reasons, including poor oil production, instability, gasoline subsidies, and a lack of foreign currency, among others, limit the country’s ability to expand.

According to the analysis, growth in Nigeria, the biggest economy in the area, shrank to 3.1% in 2022, down 0.3% percentage points from the earlier forecast. Oil production decreased to 1 million barrels per day, down more than 40% from its level in 2019, due to technical issues, insecurity, rising production costs, theft, a lack of payment discipline in joint ventures, and persistent underinvestment, in part because oil revenues were diverted to gasoline subsidies, which are projected to account for more than 2% of GDP in 2022. (NEITI 2022; World Bank 2022t).

“A robust rebound in non-oil industries slowed down in the second half of the year due to flooding and skyrocketing consumer prices (annual inflation above 21% for the first time in 17 years), which disrupted business and reduced demand from consumers. The naira’s over 30% depreciation on the parallel market last year and ongoing gasoline and foreign currency shortages further slowed down the economy.

The bank also pointed out that the dismal economic growth of 2.9% in 2023 would barely surpass population growth, which is often estimated to be about 2.5% in earlier studies.

The bank had reduced its economic forecast for Nigeria’s economic growth from 3.8% to 3.1% only three weeks before to the most recent prediction.

According to the World Bank’s Nigeria Development Update report, Nigeria’s economy must expand more quickly to combat poverty.

According to the research, inflation in Nigeria increased to 21.1% in October 2022, forcing up to five million more people into poverty since the year 2022 began.

The report went on to say that despite greater income from oil exports, government reserves have decreased and the currency market is seriously skewed, which harms the business climate and investment.

It issued a warning that the macroeconomic policy framework’s flaws are stunting Nigeria’s economic development and increasing its susceptibility to shocks.

“Nigeria may decide whether to carry out important macroeconomic and structural changes that might lessen its vulnerability to crises and boost development. By doing this, Nigerians as a whole would have improved life outcomes, higher per capita incomes, and sustained poverty reduction.

Shubham Chaudhuri, the World Bank’s Country Director for Nigeria, stated that “urgent business-unusual decisions are needed to avoid a scenario in which up to 80 million Nigerians of working age do not have a full-time job by 2030 and up to 23 million more Nigerians could be living in extreme poverty.”

If Nigeria decides to implement reforms that stabilize its macro-fiscal policy settings and support investment, Alex Sienaert, the World Bank’s lead economist for Nigeria and co-author of the report, noted that this would be transformative for 80 million poor Nigerians, for Nigeria as a whole, and for Africa.

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