A new report by the World Bank Group says Nigeria’s would rebound from recession this year, closing with a slim 1% GDP growth, which is slower than the 2.9% forecast for Sub-Saharan Africa amidst adjustment to lower commodity prices.
According to the World Bank Group’s January 2017 Global Economic Prospects report, Sub-Saharan Africa’s growth would outperform its major economies like Nigeria and South Africa (1.1%) and fellow oil producer- Angola (1.2), is seen coming better than the 2.7% forecast for the global economy.
Still in Africa, the report foresees economies that are not natural-resource intensive remaining robust during the year.
Growth in advanced economies is expected to edge up to 1.8% this year, the report said, noting that “fiscal stimulus in major economies—particularly in the United States—could generate faster domestic and global growth than projected, although rising trade protection could have adverse effects. Growth in emerging market and developing economies as a whole could pick up to 4.2% this year from 3.4% in the year just ended amid modestly rising commodity prices.”
That notwithstanding, the World Bank said the outlook is clouded by uncertainty about policy direction in major economies, noting that protracted period of uncertainty could prolong the slow growth in investment that is holding back low, middle, and high income countries.
Commenting on the report, the statement quoted World Bank Group President, Jim Yong Kim, as saying that “after years of disappointing global growth, we are encouraged to see stronger economic prospects on the horizon.
“Now is the time to take advantage of this momentum and increase investments in infrastructure and people. This is vital to accelerating the sustainable and inclusive economic growth required to end extreme poverty,” he added.
The report analyzes the worrisome recent weakening of investment growth in emerging market and developing economies, which account for one-third of global GDP and about three-quarters of the world’s population and the world’s poor. Investment growth fell to 3.4% in 2015 from 10% on average in 2010, and likely declined another half percentage point last year.
The statement noted that the expected slowing investment growth is partly a correction from high pre-crisis levels, just as it reflects obstacles to growth that emerging and developing economies have faced, including low oil prices (for oil exporters), slowing foreign direct investment (for commodity importers), and more broadly, private debt burdens and political risk.
For World Bank Chief Economist Paul Romer, “we can help governments offer the private sector more opportunities to invest with confidence that the new capital it produces can plug into the infrastructure of global connectivity.
“Without new streets, the private sector has no incentive to invest in the physical capital of new buildings. Without new work space connected to new living space, the billions of people who want to join the modern economy will lose the chance to invest in the human capital that comes from learning on the job.”
Emerging market and developing economy commodity exporters are expected to expand by 2.3% in 2017 after an almost negligible 0.3% pace in 2016, as commodity prices gradually recover and as Russia and Brazil resume growing after recessions.
Commodity-importing emerging market and developing economies, in contrast, should grow at 5.6% this year, unchanged from 2016. China is projected to continue an orderly growth slowdown to a 6.5 percent rate. However, overall prospects for emerging market and developing economies are dampened by tepid international trade, subdued investment, and weak productivity growth.
Among advanced economies, growth in the United States is expected to pick up to 2.2%, as manufacturing and investment growth gain traction after a weak 2016. The report looks at how proposed fiscal stimulus and other policy initiatives in the United States could spill over to the global economy.
Also commenting, World Bank Development Economics Prospects Director, Ayhan Kose, added that “because of the outsize role the United States plays in the world economy, changes in policy direction may have global ripple effects. More expansionary U.S. fiscal policies could lead to stronger growth in the United States and abroad over the near-term, but changes to trade or other policies could offset those gains.
“Elevated policy uncertainty in major economies could also have adverse impacts on global growth.”