World Bank Predicts over 5% GDP Growth for Nigeria, Others in 2015/16

World Bank Predicts over 5% GDP Growth for Nigeria, Others in 2015/16

*. Says Ebola, terrorism remain areas of concern
*. IMF lauds nation’s economic resilience, despite security challenges
The World Bank has declared that despite weaker than expected global growth and stable or declining commodity prices, African economies, including Nigeria’s, have continued to expand at a moderately rapid pace, with regional gross domestic product (GDP) projected to strengthen to 5.2 per cent yearly between 2015 and 2016 from 4.6 per cent in 2014.
According to the bank’s ‘New Africa’s Pulse’—a twice yearly analysis of the issues shaping Africa’s economic prospects - significant investment in infrastructure, increased agricultural production and expanding services in African retail , telecoms, transportation, and finance, are expected to continue to boost growth in the region.
This economic reading also agrees with the verdict of the International Monetary Fund (IMF) which declared that despit pite the grave security challenges in Nigeria, the economy of the nation remains resilient. The IMF gave this verdict in its latest World Economic Outlook (WEO) as at October 2014 titled: “Legacies, Clouds, Uncertainties,” released tuesday.
The IMF also stated that recent revisions to national accounts data by Nigeria shows that the economy is more diversified than previously thought.
The IMF also acknowledged the accretion of Nigeria’s external reserves.
The pick-up in growth, the World Bank said, is expected to occur in a context of lower commodity prices and lower foreign direct investment as a result of subdued global economic conditions.
“Overall, Africa is forecast to remain one of the world’s three fastest growing regions and to maintain its impressive 20 years of continuous expansion,” said the World Bank’s Chief Economist for Africa, Francisco Ferreira.
He noted that downside risks that require enhanced preparedness include fiscal deficits in a number of countries; economic fallouts from the activities of terrorist groups such as Boko Haram and Al Shabaab, and most urgently, the onslaught of the Ebola epidemic in West Africa.
A world Bank study of the likely economic impact of Ebola, released last month, suggested that if the virus continues to spread in the three worst affected countries—Sierra Leone, Liberia, and Guinea, its economic impact could grow eight-fold, dealing a potentially catastrophic blow to the already fragile nations.
Meanwhile, the bank has stated that remittances by international migrants from developing countries are on course for strong growth this year, while at the same time forced migration due to violence and conflict has reached unprecedented levels.
In its issue of Migration and Development Brief, the World Bank said officially recorded remittances to developing countries are expected to reach $435 billion this year, an increase of 5 per cent over 2013.
Remittances to developing countries will continue climbing in the medium term, reaching an estimated $454 billion in 2015.
Global remittances, including those to high-income countries, are estimated at $582 billion this year, rising to $608 billion next year. .
"Remittances to developing countries grew this year by 5 percent. Remittance inflows provided stable cover for substantial parts of the import bill for such countries as Egypt, Pakistan, Haiti, Honduras, and Nepal. India and China lead the chart with projected remittance inflows of, respectively, $71 and $64 billion in 2014”, the report said.
The brief notes that the global average cost of sending remittances continued its downward trend in the third quarter of 2014, falling to 7.9 percent of the value sent, compared to 8.9 percent a year earlier. However, the cost of sending money to Africa remains stubbornly high, exceeding 11 percent.
Remittance flows are expected to grow robustly to almost all regions of the developing world, except Europe and Central Asia, where the conflict in Ukraine and associated sanctions are contributing to an economic slowdown in Russia, home to a large number of migrants from the region.
India, with the world’s largest emigrant stock of 14 million people, will remain in the top spot this year, attracting about $71 billion in remittances. Other large recipients are China ($64 billion), the Philippines ($28 billion), Mexico ($24 billion), Nigeria ($21 billion), Egypt ($18 billion), Pakistan ($17 billion), Bangladesh ($15 billion), Vietnam ($11 billion) and Ukraine ($9 billion).
As a share of GDP (2013), the top recipients of remittances were Tajikistan (42 percent), Kyrgyz Republic (32 percent), Nepal (29 percent), Moldova (25 percent), Lesotho and Samoa (24 percent each), Armenia and Haiti (both 21 percent), the Gambia (20 percent) and Liberia (18 percent).
In a special analysis on forced migration, the brief notes that forced migration due to conflict is at its highest level since World War II, affecting more than 51 million people. An additional 22 million people have been forced to move due to natural disasters, bringing the total affected by forced migration to at least 73 million, according to the latest available data.
“Despite the encouraging outlook for remittance flows, the circumstances of many migrants are troubling. With so many people on the move against their will and many others undertaking desperate and dangerous journeys, it is clear that more effort is needed to make migration safer and cheaper by exploring economically viable policy options,” said Dilip Ratha, Lead Economist, Migration and Remittances, at the World Bank’s Development Prospects Group and Head of the Global Knowledge Partnership on Migration and Development (KNOMAD).
Forced migration is typically viewed as a humanitarian issue but affects growth, employment and public spending for both origin and destination countries. The issue needs to be examined also through a development lens, says the brief.
Pakistan and Iran top the world list of refugee host countries, as millions of people from neighboring Afghanistan remain displaced after more than 35 years of conflict. At the end of 2013, nine out of 10 refugees were being hosted in developing countries.
The war in Syria has displaced half the country’s population, with 3 million refugees crossing borders and 6.5 million people displaced internally. Most Syrian refugees have fled to neighboring Lebanon, Turkey and Jordan, joining millions of Iraqi and Palestinian refugees already there. In 2014, Syrians overtook Afghans as the second largest refugee group, outnumbered only by Palestinian refugees.
In Sub-Saharan Africa, internal conflict (including renewed instability in South Sudan and Boko Haram activities in Nigeria) together with persistent drought in the Horn of Africa, are resulting in increased forced migration in the region.
Remittance flows to the Latin America and the Caribbean (LAC) region are likely to bounce back this year, following a weak 2013. Recovery in the United States will benefit Mexico, El Salvador, Guatemala and Nicaragua, which together account for more than half of the remittance flows to the region
In the Middle East and North Africa (MENA) region, officially recorded remittances are on course to expand moderately this year, rising by 2.9 percent to reach $51 billion in 2014. Flows remain volatile, especially in the three largest recipient countries – Egypt, Lebanon and Morocco. After the sharp fall in flows to Egypt in 2013, remittances are expected to stabilize in 2014, helped by attractive investment opportunities in the planned expansion of the Suez Canal.
Growth in remittances to Sub-Saharan Africa is picking up modestly this year. The importance of remittances varies greatly across the region. Remittances as a share of GDP are most significant to Lesotho, the Gambia, Liberia, Senegal and Cabo Verde. Flows as a share of foreign exchange reserves are highest in Sudan, Senegal, Togo, Mali and Cabo Verde. Remittances to the region are expected to reach $33 billion this year and $34 billion in 2015.
The indices of hope and growth were reinforced by the assessment of the International Monetary Fund (IMF) which noted that despite the security challenges Nigeria was facing, her economy remained resilient and forward looking.
The multilateral institution also projected that growth sub-Saharan Africa would remain strong, broadly in line with its April 2014 WEO projections over the 2014 to 2015 period, even though prospects would vary across countries.
Growth in Africa was buoyant at 5.1 per cent in 2013, and activity remained strong in the first half of 2014, according to the IMF.
“This was driven mainly by domestic demand, both from high investment outlays and strong private consumption—especially in low-income countries—but export growth has also remained strong.
“Continued solid public and private investment spending resulted from infrastructure projects and investment in mining and energy production in numerous countries; agricultural production recovered in some others.
“In many economies in the region, growth has also been supported by a further easing in external financial conditions since April 2014. Some economies have been able to tap capital markets at a heightened pace, and recent sovereign bond issuances in the Eurodollar market were largely oversubscribed, including maiden issuances in Kenya and Côte d’Ivoire.
“In fact, the “risk- on” mode has been broad based, with little discrimination based on domestic policies,” it added.
“The security situation in several parts of sub-Saharan Africa remains fragile, including in the Central African Republic and South Sudan”, the report said.
In addition, it noted that in contrast to robust activity in most part of the region, growth in South Africa has remained lackluster, dragged down by protracted strikes, low business confidence, and tight electricity supply.
According to the IMF, the significant depreciation of the rand has so far resulted in only a limited amount of much-needed external adjustment.
“Sovereign spreads have reverted to post-global-crisis lows across the board, regardless of countries’ fiscal positions—with the notable exception of those in Ghana.
“In this environment, currencies have generally stabilised after having weakened in 2013—except in Ghana—and some economies (in particular, Nigeria) that had used external reserves to defend the external value of their currencies in 2013 have been able to replenish these reserves,” it added.
It urged the vast majority of the countries in the region to ensure that sustaining high growth remains key consideration to foster employment creation and inclusive growth.