World Bank Predicts Sharp Fall In Nigeria’s GDP (Read Details)
The World Bank has predicted a sharp fall in Nigeria’s real gross domestic product growth as countries in sub-Saharan Africa head towards recession as a result of the ongoing coronavirus outbreak.
The latest edition of Africa’s Pulse, the World Bank’s twice-yearly economic update for the region, said COVID-19 was driving sub-Saharan Africa towards the first recession in 25 years.
The report, which was released on Thursday, said already, growth in the region had been significantly impacted by the outbreak and is forecast to fall sharply from 2.4 per cent in 2019 to -2.1 to -5.1 per cent in 2020.
The regions three largest economies – Nigeria, Angola, and South Africa – are expected to witness a sharp fall in real GDP growth as a result of persistently weak growth and investment.
“While most countries in the region have been affected to different degrees by the pandemic, real gross domestic product growth is projected to fall sharply, particularly in the region’s three largest economies – Nigeria, Angola, and South Africa – as a result of persistently weak growth and investment,” the report said.
It is estimated that COVID-19 will cost sub-Saharan Africa between $37bn and $79bn in output losses for 2020 due to a combination of effects.
The effects include trade and value chain disruptions for commodity exporters and countries with strong value chain participation, as well as reduced foreign financing flows from remittances, tourism, foreign direct investment and foreign aid.
Other effects are capital flight, direct impact on health systems, and disruptions caused by containment measures and the public response.
The World Bank report projected that oil exporting-countries such as Nigeria will be hard-hit by the impact of the outbreak.
It also projected that growth is expected to weaken substantially in the two fastest growing areas – the West African Economic and Monetary Union and the East African Community – due to weak external demand, disruptions to supply chains and domestic production.
The region’s tourism sector is expected to contract sharply due to severe disruption to travel.
The impact of the pandemic on agriculture could lead to food security crisis, the report further observed.
“The COVID-19 crisis also has the potential to spark a food security crisis in Africa, with agricultural production potentially contracting between 2.6 per cent in an optimistic scenario and up to seven per cent if there are trade blockages.
“Food imports would decline substantially (as much as 25 per cent or as little as 13 per cent) due to a combination of higher transaction costs and reduced domestic demand,” the report said.
The report urged African policymakers to focus on saving lives and protecting livelihoods by strengthening health systems and taking quick actions to minimise disruptions in food supply chains.
It also recommended implementation of social protection programmes including cash transfers, food distribution and fee waivers to support citizens, particularly those working in the informal sector.
The report noted that factors such as large and densely populated urban informal settlements, poor access to safe water and sanitation facilities, and fragile health systems posed challenges to the containment and mitigation measures.
“The COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard,” World Bank Vice-President for Africa, Hafez Ghanem, said.
The World Bank added that it was helping developing countries to strengthen their response to the pandemic by deploying up to $160bn over the next 15 months in programmes aimed at protecting the vulnerable, supporting businesses, and bolstering economic recovery.
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