By Peter Egwuatu
*Reverses oil price forecast to $67 for 2019-2020
World Bank has put the estimated growth rate for Nigeria’s economy in 2019 at 2.2 percent with its forecast oil price at average $67 per barrel for the current year and next year, down $2 from its projections last June. The bank in its Global Economic Prospects report said, growth in Sub-Saharan Africa is expected to pick up to 3.4 percent in 2019, rising to an average of 3.7 percent in 2020-21 .
According to the report, this is predicated on diminished policy uncertainty and improved investment in large economies, together with continued robust growth in non-resource intensive countries.
However, it noted that external headwinds have intensified as growth among main trading partners moderates, global financial conditions tighten, and trade policy uncertainty persists.
The report further stated: “Growth in Nigeria is projected to rebound to 2.2 percent in 2019 and 2.4 percent in 2020-21. These forecasts are unchanged from June and assume that oil production will recover, but peak below government targets, while a slow improvement in private demand will constrain growth in the non-oil industrial sector.”
Apart from revising down its oil price projections and warning about the uncertainties surrounding oil price trend this year, the World Bank also noted that global economic growth is expected to slow to 2.9 percent in 2019 from 3.0 per cent in 2018, as international trade and investment weaken. The report stated: “The outlook for the global economy has darkened. Global financing conditions have tightened, industrial production has moderated, trade tensions have intensified, and some large emerging market and developing economies have experienced significant financial market stress.”
Last year, oil prices averaged $68 a barrel, slightly lower compared to the bank’s forecast from June 2018, but 30 percent higher than the average price of oil in 2017.
“Oil prices are expected to average $67/bbl in 2019 and 2020, $2/bbl lower than June projections; however, uncertainty around the forecast is high,” the World Bank said in its January 2019 Global Economic Prospects report.
This year, oil demand growth is expected to stay robust, but expected slowdown in emerging market and developing economies (EMDEs) “could have a greater impact on oil demand than expected,” the World Bank said.