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UN projects Nigeria’s economy to grow by 3% in 2023

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JUST IN: Nigeria’s inflation rate surges to 33.2% in March

The United Nations (UN) has projected the Nigerian economy will grow by three per cent in 2023.

This, it said, is account of a robust commodities trade and dynamic consumer goods and services markets.

According to the global body, high inflation and power supply issues are affecting economic growth in the country. It disclosed this in its ‘The World Economic Situation and Prospects 2023’ report.

The report was produced by the United Nations Department of Economic and Social Affairs, in partnership with the United Nations Conference on Trade and Development and the five United Nations regional commissions: Economic Commission for Africa, Economic Commission for Europe, Economic Commission for Latin America and the Caribbean, Economic and Social Commission for Asia and the Pacific and Economic and Social Commission for Western Asia.

“High inflation and power supply issues are impacting growth in Nigeria, but the economy will benefit from robust commodities trade and dynamic consumer goods and services markets, bringing growth to three per cent in 2023,” the report said.

The UN projects that aggregate economic growth will weaken to 3.8 per cent in 2023 from 4.1 per cent in 2022 in Africa due to subdued investment and deteriorating export volumes.

It stated that price levels that rose significantly in Africa because of a global pickup in inflation in 2022 are projected to moderate in 2023. According to the agency, the share of African countries experiencing double-digit inflation increased to 40 per cent in 2022 because of supply chain disruptions and the fallout from the war in Ukraine, which made essential food and energy items more expensive.

It said, “To combat inflation and exchange rate pressure, about two-thirds of African countries increased domestic policy interest rates in 2022. Most countries will likely further increase rates in 2023 in parallel with the projected monetary stance of the Federal Reserve in the United States and the European Central Bank.”

According to the New York-headquartered agency, fiscal positions across Africa have deteriorated as governments sought to protect lives and livelihoods during the pandemic with average public debt rising to over 60 per cent of GDP and likely to remain as such in 2023.

It further revealed that African countries will struggle with principal repayment of about $11bn on Eurobonds by 2024 because of weaker currencies.

It said, “Although some large African economies have lower levels of public debt on average, they will continue to see high and rising debt-servicing costs.

“Given higher interest rates, weaker currencies against the dollar and lower capital inflows, a number of African countries will face challenges in servicing and rolling over a large volume of debt, especially in 2024, when principal repayment of about $11bn on Eurobonds will be due.

“Eurobond issuance has become harder for African governments, and yields in secondary markets have increased substantially, pointing to rising borrowing costs in the future.”

With 17 African countries set for presidential and parliamentary elections, the UN added that rising popular dissatisfaction in many countries, driven by worsening socioeconomic conditions, including subdued wage growth, the escalating cost of living, and food security concerns, could prove challenging for incumbent or new administrations.

Earlier in January, the World Bank revealed that the Nigerian economy would grow at 2.9 per cent in its Global Economic Prospects report.

Recently, the Minister of Finance, Budget and National Planning, Zainab Ahmed disclosed that the country was not planning to explore the bonds market in 2023 because of an unfavourable market.

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She said, “In 2023, we are not in the bond market. If we are able to get back to the rates of early 2021, then we can consider going back to the bond market. But we are consistently monitoring the bond market, we are monitoring the performance of our bonds, and when it gets to that comfortable level, we will explore it.”

 

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