Oil Price Hike, Service Sector to Grow Nigeria’s Economy by 2.5% in 2022 – Report

In its latest Global Economic Prospects report, the World Bank has predicted that Nigeria’s economy will grow at a 2.5 percent rate in 2022 and 2.8 percent in 2023, largely due to the expected increase in oil prices and the country’s growing services sector in 2022 and beyond.

The projection was after oil prices rose over tightening supplies and rising global demand for the commodity. It should be recalled that Investors King reported that Libya’s crude oil production dropped from 1.3 million barrels per day (bpd) to 729,000 bpd, while oil production in Kazakhstan, another oil producer with an output of 1.6 million bpd, has drastically reduced as the nation faces unrest and natural disaster.

The new growth projection for Africa’s largest economy was slightly higher than the 2.4 percent previously predicted for the country in 2021.

“In Nigeria, growth is projected to strengthen somewhat to 2.5 per cent in 2022 and 2.8 per cent in 2023. The oil sector should benefit from higher oil prices, a gradual easing of the Organisation of the Petroleum Exporting Countries production cuts, and domestic regulatory reforms. Activity in service sectors is expected to firm as well, particularly in telecommunications and financial services,” the Washington-based institution states.

The World Bank however had pointed out that the recovery from pandemic-induced income, employment losses, and inflation of food prices would be slow. It predicted that other factors such as insecurity, social unrest, emerging COVID-19 threats such as the Omicron variant will restrain the non-oil economy of Nigeria.

“Activity in the non-oil economy will remain curbed by high levels of violence and social unrest, as well as the threat of fresh COVID-19 flare-ups with remaining mobility restrictions being lifted guardedly because of low vaccination rates — just about 2 per cent of the population, had been fully vaccinated by the end of 2021,” the report stated.

“After barely increasing last year, per capita incomes are projected to recover only at a subdued pace, rising 1.1 per cent a year in 2022-23, leaving them almost 2 per cent below 2019 levels.

“In South Africa and Nigeria, per capita incomes are projected to remain more than 3 per cent below pre-pandemic levels in 2023,” the World Bank added, after projecting that the global growth is expected to decelerate from 5.5 per cent in 2021 to 4.1 per cent in 2022, then 3.2 per cent in 2023.