ALTHOUGH downward economic risks persist globally due to poor trade performance recorded in the previous year, global economic growth is projected to reach 2.5 per cent in 2020, according to the World Bank.
In its 2020 Global Economic Prospects report, World Bank expected growth in emerging markets and developing economies within the year to a 4.1 per cent, if conscious efforts are made by the government.
However, despite the anticipated increase foreseen for emerging markets, about a third of the emerging market and developing economies are projected to decelerate this year due to “weaker-than-expected exports and investment.”
Commodity exporters—including Nigeria’s slowed from 2 percent in 2018 to an estimated 1.5 percent in 2019, 0.6 percentage point below earlier forecasts as weakening global demand and ongoing domestic challenges continued to discourage investment and trading activities.
“In Angola, Nigeria, and South Africa—the three largest economies in the region—growth was subdued in 2019, remaining well below historical averages and contracting for a fifth consecutive year on a per capita basis,” the report states in part.
The report also showed that the balance of risks for Sub-Saharan Africa would downside with a decrease in major trading partners such as China, the Euro Area, or the United States, which would substantially lower export revenues and investment.
Further economic gloom is anticipated for the region if exports to China reduced “given Sub-Saharan Africa’s heavy reliance on extractive sectors for export and fiscal revenues.”
Nigeria’s economic growth of real Gross Domestic Product is projected to get to 2.1% from a poor percentage increase of -0.1 per cent due to dreary economic activities of the past year and the underperformance recorded in the agricultural sector as a result of “lingering insurgency in the Northeast and farmers-herdsmen clashes.”
Although the anticipated growth in 2020 is expected to improve investors’ confidence in some large economies by strengthening cyclical recovery among industrial commodity exporters with a projected increment in oil production, including a robust growth among several exporters of agricultural commodities, Ceyla Pazarbasioglu, World Bank Group Vice President for Equitable Growth, Finance and Institutions noted that growth in the emerging and developing economies are likely to remain low, unless policymakers undertake structural reforms that would boost broad-based growth.
Pazarbasioglu warned that although some of the economic shortcomings were offset by increased oil production, governments should see economic policy formations as steps engineered towards improving the business climate, the rule of law, debt management, and productivity to help achieve sustained growth and poverty reduction.
Sub-Saharan Africa, regional growth is expected to rise to 2.9 per cent in 2020 and strengthen to 3.2 percent in 2021-22 from the “slower-than-expected 2.4 per cent recorded in 2019” if investors’ confidence in the region remain steady, energy bottlenecks ease, and there is an increase in oil exports with a record growth in agricultural commodity.
Unfortunately, projections see advanced economies as a group slipping to 1.4 per cent in 2020 due to “continued softness in manufacturing.”