What World Bank’s Reversed Economic Forecast Means For Nigeria
Last week, the World Bank released its economic outlook for sub-Saharan Africa for the remaining part of 2018.
The lender had believed that the economy of the sub-Saharan Africa would grow by at least 3.1%, but in its reversed outlook for the sub-region released on October 3, the lender cut its projection to 2.7%.
The World Bank had blamed sluggish growth in Nigeria, South Africa and Angola for the reversed growth forecast for the sub-region.
In the same vein, Nigeria’s growth forecast was also reversed from 2.1% to 1.9%.
But it then turns out that the World Bank is even more optimistic about growth in Nigeria, compared to the Central Bank of Nigeria, CBN which cut its growth projection for Nigeria to 1.7%.
So, what does this all mean to you?
1. Unemployment & Underemployment Will Continue To Climb: As you already know, in Nigeria, the labourers are plenty but the harvest is very small.
Nigeria’s unemployment rate has continually risen since 2014 and is said to be around 18.8%, according to National Bureau of Statistics.
Youth unemployment is worse at 21.73%.
“The reverse in economic growth forecast means that the economy won’t be able to add more jobs and even those who have jobs may struggle to keep it,” said Thomas, an economic analyst in an interview with Bounce news in Lagos.
According to him, “As far as jobs are concerned, it also means that we will end up having more people underemployed. That’s a scenario where people with master’s degree for instance are riding Keke Marwa. We have many of such instances.”
2. Government Won’t Be Able To Deliver On Infrastructure: The Federal Government under President Muhammadu Buhari is already investing lots of money on infrastructure, mostly roads and railways, but a lot more cash, which isn’t available, is needed to invest in power, healthcare and education.
The current economic projection by the World Bank means that the government won’t be seeing more resources to invest in infrastructure, making it harder to foresee any economic improvement.
3. Increased Possibility Of Another Recession: The reversed economic growth projection means that the risk of returning to a period of complete negative growth is more real than imagined.
Already, at the second quarter of the year, the economy recorded weak growth.
The numbers were so small you could bite your tongue if your tried to call them.
So, the fact that economic growth projections are even being reversed doesn’t make it look any better for the country.
4. Foreign Investors Will Likely Stay Away: Between February and August this year, no less than 2.49 trillion naira was pulled from the Nigerian stock market by foreign investors.
That is huge. But that is only money removed by briefcase investors.
When it comes to foreign direct investment, the reversal of the economic projection is sending a strong signal to foreign investors that Nigeria isn’t attractive enough.
It also reduces the confidence level of those who have already invested.
5. More Debts: The Nigerian government is already neck deep in debts – both local and external.
The reversal of the economic projection doesn’t help the situation at all, as the government will likely end up borrowing more money in an attempt to boost spending and revive the economy.
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