The global economy is expected to grow at 5.6 per cent in 2021, although many emerging market and developing economies continue to struggle with the COVID-19 pandemic and its aftermath.
The World Bank said this in its June Global Economic Prospects released on Tuesday in Washington D.C., adding that the expected growth was based largely on strong rebounds from a few major economies.
The 5.6 per cent expected growth, the fastest post-recession pace in 80 years, is an upward review from the 4.1 per cent forecast in January.
According to the bank, in spite of the recovery, global output will be about two per cent below pre-pandemic projections by the end of the year.
Also, per capita income losses would not be unwound by 2022 for about two-thirds of emerging market and developing economies.
It said that among low-income economies, where vaccination had lagged, the effects of the pandemic had reversed poverty reduction gains and aggravated insecurity and other long-standing challenges.
Among major economies, the United States of America’s growth is projected to reach 6.8 per cent, reflecting large-scale fiscal support and the easing of pandemic restrictions, while growth in other advanced economies is also firming, but to a lesser extent.
“Among emerging markets and developing economies, China is anticipated to rebound to 8.5 per cent this year, reflecting the release of pent-up demand.
“Emerging market and developing economies as a group are forecast to expand by six per cent this year, supported by higher demand and elevated commodity prices.”
It however, said that the recovery in many countries was being held back by a resurgence of COVID-19 cases and lagging vaccination progress, as well as the withdrawal of policy support in some instances.
It said that excluding China, the rebound in this group of countries was anticipated to be a more modest 4.4 per cent, while the recovery among emerging market and developing economies was forecast to moderate to 4.7 per cent in 2022.
Even so, gains in this group of economies are not sufficient to recoup losses experienced during the 2020 recession, and output in 2022 was expected to be 4.1 per cent below pre-pandemic projections,” it said.
It added that per capita income in many emerging market and developing economies was also expected to remain below pre-pandemic levels and losses were anticipated to worsen deprivations associated with health, education and living standards.
Major drivers of growth had been expected to lose momentum even before the COVID-19 crisis, and the trend is likely to be amplified by the scarring effects of the pandemic.
“Growth in low-income economies this year is anticipated to be the slowest in the past 20 years other than 2020, partly reflecting the very slow pace of vaccination.
“Low-income economies are forecast to expand by 2.9 per cent in 2021 before picking up to 4.7 per cent in 2022.
“The group’s output level in 2022 is projected to be 4.9 per cent lower than pre-pandemic projections.”
For Sub-Saharan Africa, regional activity is expected to expand a modest 2.8 per cent in 2021 and 3.3 per cent in 2022.
According to the report, positive spillovers from strengthening global activity, better international control of COVID-19 and strong domestic activity in agricultural commodity exporters are expected to gradually help lift growth.
“Nonetheless, the recovery is envisioned to remain fragile, given the legacies of the pandemic and the slow pace of vaccinations in the region.
“In a region where tens of millions more people are estimated to have slipped into extreme poverty because of COVID-19.
“Per capita income growth is set to remain feeble, averaging 0.4 per cent a year in 2021-22, reversing only a small part of last year’s loss.
“Risks to the outlook are tilted to the downside, and include lingering procurement and logistical impediments to vaccinations, further increases in food prices that could worsen food insecurity, rising internal tensions and conflicts, and deeper-than expected long-term damage from the pandemic.”
In Nigeria, however, growth is projected to resume at a modest rate of 1.8 per cent in 2021 and edge up to 2.1 per cent in 2022, assuming higher oil prices, a gradual implementation of structural reforms in the oil sector and a market-based flexible exchange rate management.
“The expected pickup is also predicated on continued vaccinations in the second half of 2021 and a gradual relaxation of COVID-related restrictions that will allow activity to improve.
“Nonetheless, output in Nigeria is not expected to return to its 2019 level until end-2022.”
David Malpass, the World Bank Group President, said that while there were welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world.
He said that globally coordinated efforts were essential to accelerate vaccine distribution and debt relief, particularly for low-income countries.
“As the health crisis eases, policymakers will need to address the pandemic’s lasting effects and take steps to spur green, resilient, and inclusive growth while safeguarding macroeconomic stability.”
The report said that lowering trade costs such as cumbersome logistics and border procedures could help bolster the recovery among emerging market and developing economies by facilitating trade.
Indermit Gill, World Bank Group Vice President for Equitable Growth and Financial Institutions, said that linkages through trade and global value chains had been a vital engine of economic advancement for developing economies and lifted many people out of poverty.
He said that however, at current trends, global trade growth was set to slow down over the next decade.
“As developing economies recover from the COVID-19 pandemic, cutting trade costs can create an environment conducive to re-engaging in global supply chains and reigniting trade growth.”
It also said that rising food prices and accelerating aggregate inflation may also compound challenges associated with food insecurity in low-income countries.
However, policymakers in these countries should ensure that rising inflation rates do not lead to a de-anchoring of inflation expectations and resist subsidies or price controls to avoid putting upward pressure on global food prices.
Instead, policies focusing on scaling up social safety net programs, improving logistics and climate resilience of local food supply would be more helpful, it added. (NAN)
President Buhari transmits Business Facilitation bill to N’Assembly
The Senate has received the Business Facilitation (Miscellaneous Provisions) Bill 2022, forwarded to the National Assembly by President Muhammadu Buhari, for consideration and passage.
The bill was accompanied by a letter dated 17th June, 2022.
The letter, addressed to the Senate President, Ahmad Lawan, was read during plenary on Tuesday.
President Buhari, in the letter, explained that the expeditious consideration and passage of the bill would promote the ease of doing business in Nigeria.
It reads, “Pursuant to Sections 58(2) of the 1999 Constitution of the Federal Republic of Nigeria (as amended), I forward herewith the Business Facilitation (Miscellaneous Provision) Bill 2022 for the kind consideration of the Senate.
“Business Facilitation (Miscellaneous Provision) Bill 2022 seeks to promote the war of doing business in Nigeria by amending relevant legislation.
“While hoping that this submission will receive the usual expeditious consideration of the Senate, please accept, Distinguished Senate President, the assurances of my highest consideration.”
N5 trillion urgently needed to cushion effects double digits increase on ordinary Nigerians – World Bank
The World Bank has warned that Nigeria could lose about N5trillion in 2022 from gasoline subsidies.
The bank also said that N5 trillion is urgently needed to cushion ordinary Nigerians from the crushing effect of double-digit increases in the cost of basic commodities.
The World Bank said in it Nigeria Development Update (NDU) released on Tuesday in Abuja.
The report said: “When we launched our previous Nigeria Development Update in November 2021, we estimated that Nigeria could stand to lose more than N3 trillion in revenues in 2022 because the proceeds from crude oil sales, instead of going to the federation account, would be used to cover the rising cost of gasoline subsidies that mostly benefit the rich”.
World Bank Country Director for Nigeria Shubham Chaudhuri, however noted: “Sadly, that projection turned out to be optimistic. With oil prices going up significantly, and with it, the price of imported gasoline, we now estimate that the foregone revenues as a result of gasoline subsidies will be closer to 5 trillion Naira in 2022.
“N5 trillion is urgently needed to cushion ordinary Nigerians from the crushing effect of double-digit increases in the cost of basic commodities, to invest in Nigeria’s children and youth, and in the infrastructure needed for private businesses small and large to flourish, grow and create jobs.”
The report noted: “Nigeria is in a paradoxical situation: growth prospects have improved compared to six months ago but inflationary and fiscal pressures have increased considerably, leaving the economy much more vulnerable”.
Nigeria’s banking sector now immune to economic shock – NDIC
Nigeria Deposit Insurance Corporation (NDIC) has said that the banking sector is now immunized to withstand shocks that may impact the economy and the financial system.
Mr Bello Hassan, Managing Director of NDIC said this at a retreat for members of the Senate Committee on Banking, Insurance and other Financial Institutions with the NDIC, in Lagos.
Any change in fundamental macroeconomic variables or relationships that has a significant impact on macroeconomic outcomes and measures of economic performance, such as unemployment, consumption, and inflation, is referred to as an economic shock.
Mustapha Ibrahim, Executive Director (Operations), who represented the NDIC boss, said Nigerian banking industry was currently resilient to most of these difficulties, particularly external shocks over which the Corporation had no control.
He said: “We have tried to immunise the system to withstand shocks that may be impacting on the economy and the financial system”.
Hassan, further said that effective risk-based management remained critical to a safe and sound financial system.
“The NDIC and the Central Bank of Nigeria have a very robust supervisory framework under the risk-based supervisory format the risk-based approach is actually proactive. For the most part, we try to anticipate all these risks – Macro, micro, domestically and globally – to address them continuously.
“So, it is so dynamic that we also are constantly on a real-time basis, monitoring the industry continuously and fine-tuning our supervisory tools, both onsite and offsite, to mitigate some of the challenges the banks may be facing,” he said.
On his part, Chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, said the retreat demonstrated progress in creating lasting and workable relationships in the national interest.
Sani, who was represented by Senator Olubunmi Adetunbi, was optimistic that the outcome will aid in the strengthening of the financial and banking sectors, particularly the corporation’s supervisory and regulatory role.
“The National Assembly and NDIC are key institutions critical to the growth and development of the Nigerian economy. While we provide the legal and institutional frameworks, NDIC carries out its regulatory or supervisory responsibilities in order to safeguard the banking sector.
“Engagement of this nature gives us the platform to deeply look into our activities and responsibilities and also examine how far we have gone in carrying out our mandate as required. It helps in injecting fresh ideas into our operations which will materialise into an improved, effective and efficient service delivery to Nigerians,” he said.
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