Nigeria’s economy shrank by 4.1% in 2020 – World Bank

Nigeria’s economy is estimated to have contracted 4.1 percent in 2020, as the effects of the pandemic impacted economic activity in all sectors, the World Bank said on Tuesday.

The bank, in its ‘January 2021 Global Economic Prospects’, said output in the sub-Saharan Africa region contracted by an estimated 3.7 percent in 2020, as the COVID-19 pandemic and associated lockdowns disrupted economic activity.

It said as a result, per capita income shrank by 6.1 percent last year, setting average living standards back by at least a decade in a quarter of sub-Saharan African economies.

“Hardest hit were countries with large domestic outbreaks, those heavily dependent on travel and tourism, and commodity exporters, particularly oil exporters. COVID-19 outbreaks persisted in the second half of last year in several countries, with little sign of abating,” it added.

The multilateral financial institution noted that output fell sharply last year in Nigeria and South Africa.

“Growth in Nigeria is expected to resume at 1.1% in 2021. Activity is nevertheless anticipated to be dampened by low oil prices, OPEC quotas, falling public investment due to weak government revenues, constrained private investment due to firm failures, and subdued foreign investor confidence,” it said.

According to the report, growth in the region is forecast to rebound moderately to 2.7 percent in 2021.

It said, “While the recovery in private consumption and investment is forecast to be slower than previously envisioned, export growth is expected to accelerate gradually, in line with the rebound in activity among major trading partners.

“The resumption in activity in major advanced and emerging economies and key trading partners of the region (Europe, China, US) is chiefly underpinned by positive news on vaccine development and rollout as well as new rounds of fiscal stimulus.”

According to the World Bank, expectations of a sluggish recovery in Sub-Saharan Africa reflect persistent COVID-19 outbreaks in several economies that have inhibited the resumption of economic activity.

It said, “The pandemic is projected to cause per capita incomes to decline by 0.2 percent this year, setting Sustainable Development Goals further out of reach in many countries in the region. This reversal is expected to push tens of millions more people into extreme poverty over last year and this year.”