â€¢ World Bank raises Nigeriaâ€™s 2017 growth forecast to 1.2%
Obinna Chima with agency report
South Africa has entered recession for the first time in eight years, data from Statistics South Africa showed on Tuesday.
According the latest report by the French news agency, AFP, the data from Statistics South Africa in Pretoria showed the first quarter contraction was led by weak manufacturing and trade.
But as South Africaâ€™s economy slips into recession, that of Nigeria is showing great promise as the World Bank has lifted its 2017 growth projection for the Nigerian economy to 1.2 per cent, higher than the one per cent it had predicted previously.
The multilateral institution stated this in its latest Global Economic Prospects for June 2017,that was posted on its website yesterday.The Bank had in the January 2017 edition of the report predicted a one per cent growth for Nigeriaâ€™s economy.
According to the AFP, the data showed that South Africaâ€™s economy contracted by 0.7 per cent in the first three months of 2017 after shrinking by 0.3 per cent in the fourth quarter of last year.
The worst performing sector was trade, catering and accommodation, which contracted by 5.9 per cent, while manufacturing â€“ one of the key sectors â€“ fell by 3.7 per cent.
Standard Chartered Bankâ€™s Chief Africa Economist Razia Khan said the â€œawfulâ€ data showed weakness where it was not expected.
In the meantime, the World Bank has lifted its 2017 growth projection for the Nigerian economy to 1.2 per cent, higher than the one per cent it had predicted previously.
The multilateral institution stated this in its latest Global Economic Prospects for June 2017,that was posted on its website on Tuesday.
The Bank had in the January 2017 edition of the report predicted a one per cent growth for Nigeriaâ€™s economy.
However, in the latest report, the Bank stated that Nigeriaâ€™s Gross Domestic Product (GDP) growth was expected to rise from 1.2 per cent in 2017 to 2.5 per cent between 2018 -2019, helped by a rebound in oil production, as security in the oil producing region improves as well as an increase in fiscal spending.
It stated that in Nigeria, militantsâ€™ attacks on oil pipelines decreased, adding that the economic recession in Nigeria was receding.
In the first quarter of 2017, Nigeriaâ€™s GDP fell by 0.5 per cent (year-on-year), compared with a 1.7 per cent contraction in the fourth quarter of 2016. The Purchasing Managersâ€™ Index for manufacturers returned to expansionary territory in April, indicating growth in the sector after contraction in the first quarter. Non-resource intensive countries, including those in the West African Economic and Monetary Union (WAEMU), have been expanding at a solid pace.
â€œOil exports are rebounding in Nigeria on the back of an uptick in oil production from fields previously damaged by militantsâ€™ attacks. Mining companies across the region are resuming production and exports.
â€œIn contrast, current account balances have remained under pressure in a number of non-resource intensive countries. In these countries, capital goods imports have been strong, reflecting ambitious public investment programs.
â€œCapital inflows in the region are rebounding from their low level in 2016. Nigeria tapped the Eurobond market twice in the first quarter of 2017, followed by Senegal in May,â€ it added.
The report noted that after slowing sharply in 2016, growth in Sub-Saharan Africa (SSA) was recovering, supported by modestly rising commodity prices, strengthening external demand, and the end of drought in several countries.
Despite recent declines, it pointed out that oil prices are 10 percent higher than their average levels in 2016.
The report further stated that regional inflation was gradually decelerating from its high level in 2016.
Commenting on its outlook for the region, it estimated that growth in Africa was expected to pick up to 2.6 per cent in 2017, and average 3.4 percent in 2018-2019, slightly above population growth.
The recovery was predicated on moderately rising commodity prices and reforms to tackle macroeconomic imbalances.
â€œThe subdued recovery in the regionâ€™s largest economies reflects the slower-than-expected adjustment to low commodity prices in Angola and Nigeria, and higher-than-anticipated policy uncertainty in South Africa.
â€œIn other oil exporters, growth is expected to strengthen in Ghana as increased oil and gas production boosts exports and domestic electricity production. Growth will be weaker than previously projected in CEMAC, as larger-than envisioned fiscal adjustment reduces public investment. In several metals exporters, high inflation and tight fiscal policy will be a greater drag on activity than previously expected,â€ it added