World Bank Says Fuel shortage, Inflation’ll Weaken Nigeria’s Economic Growth
The World Bank has said that fuel shortage and rising inflation will likely restrain economic growth in Nigeria.
It said this in the June 2022 edition of its Global Economic Prospects report.
The financial institution had projected that Nigeria’s economy would grow by 3.4 per cent in 2022 but decline to 3.2 per cent in 2023 and 2024.
For the first quarter of 2022, the National Bureau of Statistics reported a 3.11 per cent growth, which is still less than the World Bank’s growth projection for Nigeria.
The lender said the growth in Nigeria’s economy would be driven by elevated oil prices, recovery in agriculture and manufacturing, and structural reforms (for example, the Petroleum Industry Act of 2021).
However, it noted that there would be persistent production challenges in the oil sector, which are expected to weigh on growth.
The World Bank also said, “The recovery in non-oil sectors is envisioned to continue, although shortages of fuel and higher food prices would restrain growth.”
The bank also stressed that recurring fuel shortages and power blackouts would weigh heavily on growth.
The report read in part, “Four in ten Nigerians live below the poverty line, with many more at risk of falling into poverty and becoming food insecure. Increases in food prices would further erode domestic demand.”
The bank further warned that high and persistent inflation was weighing on consumer purchasing power, especially of poor and vulnerable households.
Economists, who spoke with our correspondent, said that beyond inflation affecting the purchasing power of consumers, manufacturers have had to reduce the quantity and quality of their products, which has led to the sachet economy.
Speaking on this, the Director of Research and Strategy, Chapel Hill Denham, Mr Tajudeen Ibrahim, stressed the role of poverty, which is worsened by inflation, in the consumer sector.
He said, “Poverty plays a crucial role in the development we are seeing in the consumer sector.”
The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, decried the issue of rising inflation in the country.