The World Bank has projected that Nigeria’s per capita income will return to its pre-pandemic level by 2025.
Per capita income or total income measures the average income earned per person in a given area in a specified year. It is calculated by dividing the area’s total income by its total population.
The bank in its Global Economic Prospects report for January 2024 outlook said the country’s economy is expected to witness a gradual improvement in the coming years, based on the gradual impact of macro-fiscal reforms initiated by the government
The Sub-Saharan African region, including Nigeria, experienced a slowdown in economic growth to an estimated 2.9 per cent in 2023, primarily due to country-specific challenges such as higher input prices for businesses in Nigeria.
The region’s three largest economies – Nigeria, South Africa, and Angola – saw their growth rate slow to an average of 1.8 per cent in 2023.
The Sub-Saharan Africa region, where Nigeria is the largest economy, experienced a deceleration in growth to an estimated 2.9 per cent in 2023, lower than the earlier projection.
Nigeria’s growth in 2023 softened to an estimated 2.9 per cent, influenced by various factors including services growth weakening due to a disruptive currency demonetisation policy.
However, there was an increase in annual oil production after previous years’ decline.
Looking forward, the Bretton Woods institution projected Nigeria’s economic growth at 3.3 per cent for 2024 and 3.7 per cent for 2025. These projections are 0.3 and 0.6- per cent points higher than previous estimates made in June last year.
This improvement is expected due to the gradual impact of macro-fiscal reforms initiated by the government.
Key reforms have included removing the gasoline subsidy and unifying the exchange rate, which, despite causing short-term challenges, are deemed necessary for long-term economic stability and growth.
Growth in the coming years is expected to be driven by sectors like agriculture, construction, services, and trade.
Moreover, inflation is projected to ease gradually as the effects of last year’s exchange rate reforms and the removal of fuel subsidies fade away.
The report read, “Growth in Nigeria is projected at 3.3 per cent this year and 3.7 per cent in 2025—up 0.3 and 0.6 percentage points, respectively, since June—as macro-fiscal reforms gradually bear fruits. The baseline forecast implies that per capita income will reach its pre-pandemic level only in 2025.