The World Bank has cut its economic growth forecast for Nigerian growth this year by 0.2 percentage point to 1.9 per cent and that of the sub-Saharan Africa this year to 2.7 per cent from an earlier forecast of 3.1 percent, citing slower than expected growth witnessed in Africa’s largest economies.
Nigeria’s growth had slowed in the second quarter while South Africa is slipping into a recession.
Sluggish expansion in Angola, Nigeria and South Africa, the three biggest economies, is weighing on economic activity in the area, it said.
The World Bank cut its forecast It also cut its estimate for South African GDP expansion to one percent this year from 1.4 percent before, and sees growth in 2019 remaining subdued as high unemployment constrains domestic demand.
The region, which had posted a fairly fast average growth rate in the years leading up to 2015, suffered a loss of momentum in economic output after commodity prices crashed in 2015 and 2016. In April this year, the World Bank had predicted that the recovery would gather pace this year, with average growth expected at 3.1 percent, up from 2.3 percent last year.
The bank yesterday said “the slower pace of the recovery in Sub-Saharan Africa … is explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa.”
Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture, the World Bank said.
The road ahead is bumpy. The tightness of oil supply suggests that oil prices are likely to remain elevated through the rest of the year and into 2019. Metals prices have been lower than previously forecast and may remain subdued in 2019 and 2020 amid muted demand, particularly in China” it said.
The rest of the countries in the region have been growing steadily this year, the bank said, including those that don’t depend on commodities, such as Ivory Coast, Kenya and Rwanda.
Albert Zeufack, the World Bank’s chief economist for Africa, urged governments in the region to stop wasting money boost productivity to support the region’s economic recovery.
High public debt in some countries in the region, combined with weakening currencies and rising interest rates, could endanger their ability to service those debts, the World Bank warned.
“Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt,” Zeufack said.