In its Nigeria Development Update Report, the World Bank is forecasting economic growth of 1.8% this year, compared to an earlier estimate of 1.2%. However, she warned that without deep reforms, the economy will continue to grow at a slower rate than population growth of around 2.6% per year.
However, the forecast is linked to rising unemployment and inflation, the World Bank said: leads More Nigerians into criminal operations to make up for lost revenue from the continent’s leading oil producer.
In a document released in January on the matter, the Washington-based lender said population growth and the impact of the COVID-19 pandemic will drive approximately 10 million people in the West African nation into poverty by 2022. Even so, Nigeria’s President Muhammadu Buhari said in a speech on June 12 that his government had lifted 1.5 million out of poverty in the past two years and that the government aimed to lift 10 million people out of poverty in 10 years.
He also described his government’s measures to contain the spread and mitigate the effects of the virus in the country as “successful”.
The World Bank stated that there has been an increase in uncertainty in recent years Two years ago, economic activity continued to slow, leaving more people unemployed, fueling a vicious circle of violence and crime.
“While many people are moving into the informal sector and crowding, criminal activity is one of the options to make ends meet, ”World Bank Country Director for Nigeria Shubham Chaudhuri said in an interview. “Given rising inflation, this means a further deterioration in the purchasing power and livelihoods of many Nigerians.”
Chaudhuri reiterated that the government must develop a sustainable economic stimulus plan before the bank can release $ 1.5 billion in loans which was originally discussed more than a year ago.
While inflation fell slightly to 17.9% in May for the second month in a row, it remains at a rise in food prices of more than 20% an almost 4 year high. Year for year. The World Bank sees inflation averaging 16.5% this year and will remain above the 9% upper limit of the target range until at least 2023.
The World Bank has questioned the central bank’s position that inflation will be high mainly on supply restrictions, with strict exchange rate controls and expansionary monetary policy cited as the main drivers of price growth.
“Political decisions regarding exchange rates, trade, and monetary and fiscal factors are driving inflation more, especially in 2021 nor as exogenous factors related to conflict and weather shocks, “said Marco Hernandez, the World Bank’s chief economist for the country.
The lack of a credible monetary anchor keeps inflation high, with the central bank trying too many targets such as controlling price increases, promoting economic growth and maintaining a stable exchange rate, the Beric said ht.
Although the central bank has taken a step to standardize the official exchange rate with one used by inve and exporters, the exchange rate still does not reflect market forces, said the World Bank.
The World Bank urged the Nigerian central bank to seek more flexibility by restoring a dollar interbank market in order to effectively give banks the ability to trade currencies on their own behalf to increase liquidity and to move towards a uniform rate. < / p>
Nigeria’s inflation rate continued to decline for the second straight month on Tuesday, reaching 17.93% in May 2021, up from 18.12% in April 2021, according to the National Bureau of Statistics (NBS) consumer price index report. < / p>
According to the report, the index of consumer prices (CPI), which measures the rate of inflation, rose by 17.93% year-on-year in May 2021, 0.19% fewer points than in April 2021 (18 , 12%).
The closely monitored index fell from 22.72% in April 2021 to 22.28% in May 2021, indicating the second consecutive decline in the food index.
Monthly comparison On an n-th basis, the food sub-index rose by 1.05% in May 2021, compared to 0.99% in April 2021 by 0.06%.