Today, we take a closer look at the 2023 Global Economic Prospects report published by the World Bank earlier this week. The latest report is an update on the June 2022 edition. The bank projected a slowdown in the economic growth of the sub-Saharan region in 2023, due to several macroeconomic headwinds including the region's rising inflation, tightening global financial conditions, and the soaring food and energy prices as a result of the ongoing Russia-Ukraine war, among others. Consequently, growth projections for almost 60% of countries in Sub-Saharan Africa were revised downwards in 2023, reflecting the deteriorating economic outlook of the region.

In comparison to the June 2022 edition, the bank’s projected growth for the SSA region in 2022 was revised downwards by 30bps to 3.4%. The revision was mainly due to currency depreciation arising from negative terms of trade, high public debt levels, and rising inflation.    

On the domestic scene, the growth projections for Nigeria’s economy in 2022 were slashed by 30bps to 3.1%, compared with the June forecast of 3.4%.

According to the Bank, the weaker outlook for Nigeria’s economy in 2022 was driven by the security challenges in the country, low productivity of the oil sector, challenges with foreign exchange liquidity, and rising production costs, among others.

Looking ahead, the sub-Saharan economy is forecast to grow by 3.6% in 2023, 20bps lower than the June forecasts, and thereafter by 3.9% in 2024.

According to the analysis, Nigeria's economic growth will slow down in 2023, with a downward revision of 30bps to 2.9%, and then stabilize in 2024.

The country’s economic growth is expected to be hampered by the continuous underperformance of the oil sector, production and security challenges, sustained inflation, and weak fiscal position.

Economic growth in South Africa is projected to slow down by 10bps to 1.4% in 2023, before picking up to 1.8% in 2024. The weaker growth projections are largely due to restrictive financial conditions, weakening activity in economies of trading countries and political uncertainties.

The bank projects that Angola’s economy will expand by 2.8% and 2.9% in 2023 and 2024, while the growth forecasts of Ghana were estimated at 2.7% and 3.5% in 2023 and 2024 respectively.

The Bank noted the downside risks to the region’s forecasts, such as the continued Russia-Ukraine fall-out and the extent of global and domestic monetary tightening stance which will be required to rein in inflationary pressures.

The Bank projects that growth in emerging and developing economies will weaken, with respective downgrades of 80 bps and 30 bps to 3.4% in 2023 and 2024. The downward revision was marked by tighter financial conditions and weak external demand.  

The bank’s projections of global growth were revised downwards by 130bps and 30bps to 1.7% and 2.7% in 2023 and 2024 respectively compared with the June update, reflecting the continuous rise in inflation, muted investments due to tight market conditions, and continuous monetary stance by major central banks.