The World Bank predicts that growth in Nigeria and other countries in Africa will be about 4.6 per cent in 2015.
In 2014, as a result of a slowdown in several of the region’s large economies, growth was about 4.5 per cent. And the latest figures were released by Global Economic Prospects (GEP) yesterday.
The World Bank notes that the continent’s growth would rise gradually to 5.1 per cent by 2017, supported by infrastructure investment, increased agriculture production, and buoyant services.
The organisation says that the outlook is subject to significant downside risks arising from a renewed spread of the Ebola epidemic, violent insurgencies, lower commodity prices, and volatile global financial conditions.
According to the World Bank: “Policy priorities include a need for budget restraint for some countries in the region and a shift of spending to increasingly productive ends, as infrastructure constraints are acute.Project selection and management could be improved with greater transparency and accountability in the use of public resources."
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The forecast points out that, following a disappointing 2014, developing countries would see an uptick in growth this year, boosted in part by soft oil prices, a stronger US economy, continued low global interest rates, and receding domestic headwinds in several large emerging markets.
After growing by an estimated 2.6 per cent in 2014, the global economy was projected to expand by three per cent this year, 3.3 per cent in 2016 and 3.2 per cent in 2017.
Developing countries grew by 4.4 per cent in 2014 and are expected to edge up to 4.8 percent in 2015, strengthening to 5.3 and 5.4 per cent in 2016 and 2017, respectively.
Jim Yong Kim, the President of the World Bank Group, explains: “In this uncertain economic environment, developing countries need to judiciously deploy their resources to support social programs with a laser-like focus on the poor and undertake structural reforms that invest in people.It’s also critical for countries to remove any unnecessary roadblocks for private sector investment. The private sector is by far the greatest source of jobs and that can lift hundreds of millions of people out of poverty.”
Underneath the fragile global recovery lie increasingly divergent trends with significant implications for global growth.
Activity in the United States and the United Kingdom is gathering momentum as labour markets heal and monetary policy remains extremely accommodating. But the recovery has been sputtering in the Euro Area and Japan as legacies of the financial crisis linger. China, meanwhile, is undergoing a carefully managed slowdown with growth slowing to a still-robust 7.1 percent this year (7.4 percent in 2014), 7 percent in 2016 and 6.9 percent in 2017. And the oil price collapse will result in winners and losers.
The forecast reveals: “Risks to the outlook remain tilted to the downside, due to four factors. First is persistently weak global trade.Second is the possibility of financial market volatility as interest rates in major economies rise on varying timelines.Third is the extent to which low oil prices strain balance sheets in oil-producing countries. Fourth is the risk of a prolonged period of stagnation or deflation in the Euro Area or Japan”.
Kaushik Basu, the World Bank Chief Economist and Senior Vice President, says: “Worryingly, the stalled recovery in some high-income economies and even some middle-income countries may be a symptom of deeper structural malaise. As population growth has slowed in many countries, the pool of younger workers is smaller, putting strains on productivity. But there are some silver linings behind the clouds. The lower oil price, which is expected to persist through 2015, is lowering inflation worldwide and is likely to delay interest rate hikes in rich countries.”
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However, he noted that sustained low oil prices would weaken activity in exporting countries. For example, the Russian economy is projected to contract by 2.9 percent in 2015, getting barely back into positive territory in 2016 with growth expected at 0.1 percent. In contrast to middle-income countries, economic activity in low-income countries strengthened in 2014 on the back of rising public investment, significant expansion of service sectors, solid harvests, and substantial capital inflows.
Growth in low-income countries is expected to remain strong at 6 percent in 2015-17, although the moderation in oil and other commodity prices will hold growth back in commodity exporting low-income countries.