Projections by the World Bank has revealed that Nigeria’s economy would grow by 2.4 percent in 2021; an increase in the bank’s earlier growth projection of 1.8 per cent made in January this year.
The bank made this disclosure in the new edition of its Africa’s Pulse report titled ‘Climate change adaptation and economic transformation in Sub-Saharan Africa’.
The report projected that growth in Nigeria is driven by the growth in the service sectors of the economy.
“Within Africa, recovery is also multi-speed. Angola, Nigeria, and South Africa, the largest economies in the region, are expected to emerge from the 2020 recession, yet at different paces.
“Angola is expected to grow by 0.4 per cent in 2021, after five consecutive years of recession. The country is still battling to gain momentum, with elevated debt levels and weak performance of the oil industry.
“Nigeria is expected to grow by 2.4 per cent in 2021, supported by the service sector.”
It further stated that Nigeria and South Africa still lagged behind in the projected growth for the Sub-Saharan region.
“Excluding South Africa and Nigeria, the rest of Sub-Saharan Africa is rebounding faster, with a growth rate of 3.6 per cent in 2021,” the report said.
It added, “Nigeria’s economic growth shows little sign of speedy recovery from the 2020 recession. The economy grew five per cent in the second quarter, from 0.5 per cent growth in the first quarter. This was the third consecutive quarter of positive growth since the pandemic crisis.
“The main driver of the recovery is the non-oil sector, with a growth rate of 6.7 per cent compared with 0.8 per cent in the first quarter.
“The service sector recovered strongly after a disappointing first quarter, rising from -0.39 per cent to 9.27 per cent in the second quarter, while agriculture contracted from 2.28 in the first quarter to 1.30 per cent. Industrial activity also declined to -1.23 per cent in 2021Q2, down from 0.94 per cent in 2021Q1.
“Recent improvements in the labour markets have been largely attributed to workers turning to small-scale, nonfarm enterprise activities in retail and trade although their incomes remain precarious.
“In the first half of 2021, the fiscal deficit widened at four per cent of GDP, driven by an increase in debt servicing costs and capital expenditure.”
The Sub-Saharan region is projected to grow by 3.3 per cent in 2021, which is a percentage point higher than the forecast in April 2021 Africa’s Pulse projection, 3.5 per cent in 2022, and 3.8 per cent in 2023.
“This rebound was fuelled by elevated commodity prices, relaxation of stringent measures, and recovery in global trade,” the report stated.
The Bank, however, warned that although Sub-Saharan Africa was exiting recession in 2021, the recovery growth was still fragile, suggesting faster vaccine development to accelerate growth above five per cent for 2022.
The report read, “Growth in economic activity for the region is projected at 3.5 per cent in 2022 and 3.8 per cent in 2023.
“However, these projections are subject to substantial uncertainty around the pace of vaccination. Faster vaccine deployment would accelerate growth to 5.1 per cent in 2022 and 5.4 per cent in 2023 in Sub-Saharan Africa – as containment measures are lifted faster than in the baseline and spending increases.”
It added that in contrast, slower vaccine delivery and coverage would impede the relaxation of COVID-19 disruptions in economic activity and project growth to slow down to 2.4 per cent in 2023.