Nigeria will get out of recession, and grow its gross domestic product (GDP) by one per cent in 2017, according to a global economic report by the World Bank.
The World Bank said in a report released on Tuesday, January 10, that the global economy will accelerate moderately to 2.7 per cent in 2017.
According to the report, “Sub-Saharan African growth is expected to pick up modestly to 2.9 per cent in 2017 as the region continues to adjust to lower commodity prices.
“Growth in South Africa and oil exporters is expected to be weaker, while growth in economies that are not natural-resource intensive should remain robust. Growth in South Africa is expected to edge up to a 1.1 per cent pace this year.
“Nigeria is forecast to rebound from recession and grow at a 1 per cent pace. Angola is projected to expand at a 1.2 per cent pace.”
The global financial institution also forecasted economic growth for countries in South Asia, Europe, Central Asia, Latin America, Caribbean, Middle East and North Africa among others.
The projected growth on the Nigerian economy by the World Bank comes shortly after the International Monetary Fund (IMF) projected that Nigeria’s economy will be out of recession in 2017, growing by 0.6 per cent.
Meanwhile, headline inflation is set to decline to 18.3 per cent, marking the first drop in 14 months said analysts from Financial Derivatives Company Limited (FDC) in their Economic Bulletin released Wednesday January 11, 2017.
Nigeria’s inflation continued an upward swing in November, reaching 18.48 per cent, from 18.33 per cent recorded in October, according to the National Bureau of Statistics in its consumer price index report.
According to the FDC analysts, the income constraint and sustained increase in productivity in the agricultural sector, observed in the economy, served to reinforce the anticipated change in inflationary trend. While many other indicators have declined dramatically (such as purchasing power and the value of the naira) agricultural productivity has helped support gross domestic output with the sector enjoying two consecutive quarters of sustained positive growth.
The anticipated change in the inflationary trend can serve as good news to the Nigerian public who have sought respite from Nigeria’s economic woes.
However, the analysts observed that there are certain core components of the consumer basket that may increase. For instance, diesel prices have maintained a persistent increase, which in turn feeds into costs of production and logistics (cost push factors).
Diesel prices were selling at an average rate of N260/ltr in December, up 62.2 per cent year till date.
This factor according to the FDC analysts is likely to widen the divide between the rural and urban areas in terms of inflation, as urban inflation usually incorporates rural inflation plus transportation costs.
In addition, financial costs are also ridiculously high and impeding output level. Manufacturers are servicing very expensive debts as well as operating in an environment with highly priced and sometimes unavailable loans.
This is coming at a time when foreign exchange reserves have been rising in recent weeks following the gradual increase in oil price and production output.
Data from the Central Bank of Nigeria showed that within the space of about six and half weeks, the reserves have appreciated by $2 billion. It went up from $ 24.5 billion on November 24, 2016 to $26.5 billion on January 9, 2017. The foreign exchange reserves had risen to over four-month high of $25.7 billion on December 28, up from $ 25.4 billion on December 23.