World Bank Predicts Nigeria’s GDP to Increase by 3.7% in 2025

The World Bank, in its recent prediction, has revealed that Nigeria's gross domestic product (GDP) will increase by 3.7% in 2025.

The World Bank made this known in its latest report titled "Global Economic Prospect: Subdued Growth, Multiple Challenges," which projected that Nigeria (Africa's largest economy) would notice an improvement of 3.3%, up from the 2.9% forecast in 2023.

The report reads, 

• Growth in Nigeria is projected at 3.3% this year and 3.7% in 2025—up 0.3 and 0.6 percentage points, respectively, since June—as macro-fiscal reforms gradually bear fruit.

• The baseline forecast implies that per capita income will reach its pre-pandemic level only in 2025.

The World Bank in Washington said the increase was due to the gradual realisation of the recent macro-fiscal reforms.

Since the election that brought President Tinubu, Nigeria has experienced significant reforms in essential sectors, such as removing fuel subsidies and harmonising foreign exchange rates. The President has also focused on infrastructure development, manufacturing, and technology.

"Inflation should gradually ease as the effects of last year's exchange rate reforms and the removal of fuel subsidies fade. These structural reforms are expected to boost fiscal revenue over the forecast period," the World Bank declared.

The report continues,

• Growth in the region's three largest economies—Nigeria, South Africa, and Angola—slowed to an average of 1.8% last year, holding back the region's overall growth.

• In the region's other countries, growth softened to 3.9%, partly reflecting a sharp decline in metal exporters' growth alongside lower global metal prices. Moreover, intense and prolonged conflicts hampered growth in several countries.

• More broadly, post-pandemic recoveries were slowed by weakening external demand and domestic policy tightening to address persistent inflation," it remarked.

According to the National Bureau of Statistics, Nigeria's GDP was N60.66 trillion as of Q3 of 2023, after growing at 2.54%.

The commission stated that the growth rate was higher than the 2.25% recorded in Q3 2022 and the Q2 2023 growth of 2.51% following redesigning the country's currency.

However, there have been rising issues concerning Nigeria's growth prospects, following some analysis showing that there will be a rise in public debts, persistent inflation, a weak business environment, and a high cost of living, which might hinder the country's growth.

Nigeria's inflation rose to a 21-year high of 28.92% in December 2023. Meanwhile, according to data from the Debt Management Office, public debt increased to N87.91 trillion in Q3 2023.

In its 'World Economic Situation and Prospects 2024' report, the United Nations noted that African countries will continue to experience deteriorating fiscal positions against high public debt and a low domestic revenue base in 2023. The GDP growth will be based on job creation and salary increase.

"Efforts to increase in-country oil refining capacity would likely reduce domestic fuel costs in 2024 and beyond. Energy subsidy reforms in Nigeria, Angola, and Gambia and tax hikes in Kenya, Ghana, and South Africa aim to relieve the government from tight fiscal spaces."

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