The World Bank says Ukraine’s economy will shrink by 45.1 percent this year because of Russia’s invasion, which has shut down half of the country’s businesses, choked off imports and exports, and damaged a vast amount of critical infrastructure.
Unprecedented financial and export sanctions imposed by Western allies in response to the war, meanwhile, are plunging Russia into a deep recession, lopping off more than a tenth of its economic growth, the World Bank said in a report Sunday.
The war is set to inflict twice the amount of economic damage across Europe and Central Asia that the COVID-19 pandemic did, the Washington-based lender said in its “War in the Region” economic report. Besides Ukraine, it focuses on central and Eastern Europe, former Soviet republics, the Balkan countries and Turkey.
“The magnitude of the humanitarian crisis unleashed by the war is staggering,” said Anna Bjerde, the World Bank’s vice president for the Europe and Central Asia region. “The Russian invasion is delivering a massive blow to Ukraine’s economy and it has inflicted enormous damage to infrastructure.”
The report said economic activity is impossible in “large swaths of areas” in Ukraine because infrastructure like roads, bridges, ports and train tracks have been destroyed.
Ukraine plays a major role as a global supplier of agricultural exports like wheat but that’s in question now because planting and harvesting have been disrupted by the war, the report said. The war has cut off access to the Black Sea, a key route for exports, including 90 percent of Ukraine’s grain shipments, it said.
“The war is having a devastating impact on human life and causing economic destruction in both countries, and will lead to significant economic losses in the Europe and Central Asia region and the rest of the world,” the report said.
Belarus, Kyrgyzstan, Moldova and Tajikistan also are forecast to slide into recession this year, while economic growth projections have been cut for the region’s other economies because of the war’s ripple effects.
The World Bank said the humanitarian catastrophe is the biggest initial shockwave from the war and will likely be its most enduring legacy, as the wave of refugees fleeing Ukraine is “anticipated to dwarf previous crises.”
According to World Bank, more than 4 million people have fled Ukraine, with more than half going to Poland and others heading to countries like Moldova, Romania and Hungary. An additional 6.5 million have been displaced internally. Those numbers are expected to swell as the war drags on.
The report issued a stark warning that “the war will increase poverty in the region due to the recession and food price inflation.”
Beyond the humanitarian crisis, the lender said “the war is also delivering a sizable blow to the global economy through multiple channels.”
The war and sanctions have scrambled global trade routes and pushed up shipping and insurance costs, “which magnifies strains on global value chains,” the report said, noting that industries getting hit include food, automobiles, construction, petrochemicals and transport.
Inflation Rate Increases to 16.82% in April in Nigeria
Prices of goods and services in Africa’s largest economy Nigeria rose high in the month of April, according to the latest report from the National Bureau of Statistics (NBS).
The Consumer Price Index, which measures inflation rate, grew at 16.82% rate in the month under review from 15.92% in March 2022. The inflation rate has been on a steady rise since Novermber 2021 when it drops to 15.40%.
On a month basis, inflation increased to 1.76 percent in April 2022, representing an increase of 0.02% from 1.74% recorded in March. The persistent increase in prices reflect the changes in Nigeria’s economic fundamentals. One of the key challenges impacting prices is foreign exchange scarcity.
Naira to Dollar exchange rate jumped to N600/US$1 at the parallel market popularly known as the black market despite the Central Bank of Nigeria discouraging patronage at that section of forex. However, inability to access forex at central bank designated deposit money banks forced most Nigerians to the unregulated black market.
Similarly, the drop in the nation’s external reserves due to the lower crude oil production from the year to date dragged on foreign revenue that eventually hurt central bank ability to service the economy with enough forex in an economy that imported over 90% of its consumption.
Again, rising insecurities in key food producing regions contributed to the jump in prices of food items as noted in the report. The composite food index grew at 18.37% rate in April 2022, slower than the 22.72% filed in April 2021.
According to NBS, the increase in the value of the index was due to rise in prices of Bread and cereals, Food
products n.e.c, Potatoes, yam, and other tubers, Wine, Fish, Meat, and Oils. On a monthly basis, food sub-index grew 0.01% to 2% in April from 1.99% in March.
However, the more accurate 12 month index reflect decline in food index from 19.21% filed in March 2022 to 18.88% in April 2022.
ICT Changing The Face of Nigeria’s Economy
While many thought the oil sector would save the Nigerian economy, the drift is gradually shifting away from the oil sector into the non-oil sector – the Information and Communications Technology (ICT).
A recent data revealed by the National Bureau of Statistics, sighted by Investors King, shows that the ICT has contributed 16 per cent to the growth of Nigeria’s Gross Domestic Product (GDP).
On a year-on-year basis, compared to the previous year in the same quarter, ICT contributed 14.9 per cent to the GDP – a growth of 1.3 per cent.
According to the data released by NBS, “In nominal terms, in the first quarter of 2022 the sector growth was recorded at 20.54 per cent (year-on-year), 12.68 per cent points increase from the rate of 7.86 per cent recorded in the same quarter of 2021, and 14.84 per cent points higher than the rate recorded in the preceding quarter. The Quarter-on- Quarter growth rate recorded in the first quarter of 2022 was -1.87 per cent.
“The Information and Communications sector contributed 10.55 per cent to the total Nominal GDP in the 2022 first quarter, higher than the rate of 9.91 per cent recorded in the same quarter of 2021 and higher than the 9.88 cent it contributed in the preceding quarter”.
The report added that the sector, in the first quarter of 2022, recorded a growth rate of 12.07 per cent in real terms, year-on-year.
From the rate recorded in the corresponding period of 2021, there was an increase of 5.60 per cent points. Quarter-on-Quarter, the sector exhibited a growth of -9.09 per cent in real terms.
“Therefore, of total real GDP, the sector contributed 16.20 per cent in 2022 first quarter, higher than in the same quarter of the previous year in which it represented 14.91 per cent and higher than the preceding quarter in which it represented 15.21 per cent,” the data revealed.
The Information and Communications sector in Nigeria comprises of Telecommunications and Information Services, Publishing, Motion Picture, Sound Recording and Music Production and Broadcasting.
Nigeria’s Economy Moderates in Q1 2022 as Oil Sector Contracts by 23.89%
Nigeria’s GDP moderated to 3.11% year-on-year in real terms in the first quarter (Q1) of 2022
Despite the surge in global oil prices due to the ongoing war in Ukraine, the Gross Domestic Product (GDP) of the largest exporter of the commodity in Africa, Nigeria moderated to 3.11% year-on-year in real terms in the first quarter (Q1) of 2022, the National Bureau of Statistics (NBS) stated in its latest report.
Nigeria’s GDP was 2.60% higher than the 0.51% recorded in Q1 2021 when COVID-19 disrupted business activity and dragged on economic productivity. However, this was 0.88% lower than the 3.98% filed in the fourth quarter of 2021.
On quarterly basis, the nation’s real GDP grew at -14.66% in the quarter under review when compared to the fourth quarter of 2021.
Aggregate GDP increased by 13.25% year-on-year from N40,014,482.74 million in nominal terms in the first quarter of 2021 to N45,317,823.33 million in Q1 2022. According to the NBS, “the nominal GDP growth rate in Q1 2022 was higher relative to the 12.25% growth recorded in the first quarter of 2021 and higher compared to the 13.11% growth recorded in the preceding quarter.”
Nigeria’s Oil Sector
In the first quarter, Nigeria’s crude oil production dropped to 1.49 million barrels per day (mbpd), down from 1.72mbp achieved in the same quarter of 2021. This was also lower than the 1.50mbpd recorded in the fourth quarter of 2021. Suggesting that despite the increase in global oil prices in the quarter, Nigeria’s inability to up crude oil production impeded investment in the sector and subsequently dragged on revenue generation.
As expected, the real growth of the oil sector contracted by 26.04% year-on-year in Q1 2022, representing a decline of 23.83% when compared to the same quarter of 2021. Also, growth decreased by 17.99% when compared to -8.06% filed for Q4 2021.
On a quarterly basis, the oil sector grew by 9.11% in the quarter under review. The sector contributed 6.63% to Nigeria’s total real GDP in Q1 2022, own from 9.25% contributed in the corresponding quarter of 2021 and slightly higher than the 5.19% achieved in Q4 2021.
Nigeria’s Non-Oil Sector
As usual, the non-oil sector grew by 6.08% in real terms in the first quarter. This was better than the 5.28% recorded in the first quarter of 2021 and 1.34% higher than the fourth quarter of 2021.
The report attributed the growth in the non-oil sector to the increase in activities in the following sectors; Information and Communication (Telecommunication); Trade; Financial and Insurance (Financial Institutions); Agriculture (Crop Production); and Manufacturing (Food, Beverage & Tobacco).
Nigeria’s non-oil sector contributed the most to total economic growth. The sector contributed 93.37% to the nation’s GDP in the quarter under review.
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