The World Bank has said Nigeria moved out of last year’s recession faster than expected.
Nigeria slipped into recession in the second quarter of 2020 amid the economic fallout of the COVID-19 pandemic but emerged from it in the fourth quarter.
The bank, in its newly released Africa’s Pulse report, said real GDP in West and Central Africa was estimated to have contracted by 1.1 per cent in 2020, less than projected in the October 2020 Africa’s Pulse forecast, partly owing to a less severe contraction than expected in Nigeria in the second half of the year.
It said, “Following a 6.1 per cent year-on-year contraction in 2020Q2, Nigeria’s economy contracted by 3.6 per cent in 2020Q3, and expanded by 0.1 per cent in 2020Q4, moving out of recession faster than expected.
“For the year, Nigeria’s real GDP is estimated to have contracted by 1.8 per cent, a stronger outturn than projected in the October 2020 forecast.”
The Bretton Woods institution noted that Nigeria’s oil sector weakened in the fourth quarter of 2020 despite an increase in oil prices.
It said, “Partly due to OPEC+ quotas, oil production fell from 1.67 million barrels a day in 2020Q3 to 1.56 million barrels a day in 2020Q4, leading to a sharp fall in oil GDP, which was, however, offset by a rebound in the nonoil sector.
“The agriculture sector, which represents about a quarter of the economy, registered growth of 3.4 per cent year-on-year in 2020Q4. The recovery in sectors hit hardest by containment measures —including retail trade, transport, and hospitality — continued in 2020Q4, supporting the economy’s rebound.”
The World Bank said Nigeria’s muted growth prospects and slow vaccine rollout would weigh on the sub-Saharan Africa’s outlook.
It said, “Despite higher oil prices, Nigeria and other oil exporters are expected to face a slower recovery compared with the rest of the sub-region, where activity is projected to strengthen.
“Nigeria’s real GDP is projected to rebound from a 1.8 per cent contraction in 2020 to moderate growth of 1.4 per cent in 2021, driven by telecommunications services, trade due to the gradual opening of borders, agriculture due to an additional influx of labour, and construction, in a context of higher oil prices and fewer mobility restrictions.”
According to the report, consumer spending and business investment are likely to remain subdued in 2021 as double-digit inflation, high unemployment, and the slow rollout of the COVID-19 vaccine weigh on households’ real income and business confidence.
“Limited fiscal space will also constrain the recovery. Growth is projected to pick up to 2.1 per cent in 2022 as rising oil output bolsters exports, and the rollout of the COVID-19 vaccine gathers pace, helping to boost private consumption and fixed investment,” it said.