The World Bank has retained its projection for Nigeria’s economic growth rate for 2026 at 4.1 percent.
The Washington-based organization announced the projection in its 2026
‘Global Economic Prospects’ report on Thursday.
The global financial institution also maintained its
forecast for Nigeria’s economic growth rate for 2027 at 4.2 percent.
In addition, the World Bank said conflict in the Middle East
has triggered a fresh shock to the global economy, raising energy prices,
renewing inflationary pressures and slowing growth prospects across emerging
and developing economies.
The bank projected global growth to moderate to 2.5 percent
in 2026 from 2.9 percent in 2025, citing weaker prospects for economies
dependent on energy imports and countries directly affected by hostilities.
“The global economy is facing another major shock,” the
report said.
“The conflict in the Middle East has triggered sharp
increases in energy prices, renewed inflationary pressures, and fueled
expectations of tighter monetary policy.”
The World Bank said global activity is expected to
strengthen from 2027 as energy supplies recover, monetary easing resumes and
trade conditions improve.
The lender added that growth in emerging market and
developing economies (EMDEs) is projected to slow to 3.6 percent this year,
with per capita income growth expected to weaken further in 2026.
According to the report, per capita incomes in developing
economies excluding China and India, are not expected to return to pre-pandemic
levels until after 2028, suggesting a prolonged period of lost income
convergence with advanced economies.
The bank warned that risks remain tilted to the downside.
“A renewed escalation of hostilities or more prolonged
disruptions to commodity flows could further raise commodity prices, intensify
inflationary pressures and food insecurity, trigger financial stress, and lower
growth,” the Bretton Woods institution said.
The World Bank added that if energy supply disruptions
become more severe and are accompanied by significant financial stress, global
growth could fall to as low as 1.3 percent in 2026.
The institution urged policymakers to balance efforts to
control inflation with measures aimed at supporting economic activity and
preserving fiscal sustainability.
The report also highlighted growing concerns over rising
sovereign debt levels across developing economies.
According to the bank, government debt in emerging economies
has increased steadily since the global financial crisis, leaving many
countries more vulnerable to higher interest rates and debt-servicing costs.
“Rising government debt poses a key challenge for EMDEs, as
it leads to higher interest rates, higher debt-service payments, and a greater
likelihood of debt distress,” the report said.
The World Bank also said commodity-exporting countries face
additional fiscal risks due to volatile commodity prices, noting that revenue
windfalls are often spent rather than saved during boom periods.
The financial institution recommended stronger domestic
revenue mobilisation, improved public spending efficiency, better debt
management and stronger fiscal institutions to improve resilience against
future shocks.
The World Bank also said that credible fiscal rules,
independent fiscal councils, sovereign wealth funds and diversified revenue
sources would help countries reduce volatility, strengthen growth and create
jobs
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