The International Monetary Fund has warned that escalating trade tensions could undermine global economic growth.
 
In a new report on the world economic outlook, the IMF also warns of risks from a no-deal Brexit.
 
For the world economy, the IMF is now predicting growth of 3.5% in 2019. In October, it forecast 3.7%.
 
For the UK, the report predicts growth of about 1.5% this year and next, but it also says there is substantial uncertainty around that figure.
 
The global figure represents weaker growth than last year.
 
Tariff increases imposed by the Trump administration in the US and its counterpart in Beijing have already contributed to a previous downgrade.
 
The IMF also expects China's slowdown to continue. The forecast for this year and next is 6.2%.
 
In this new assessment, there are revisions for the developed economies, particularly the eurozone.
 
That reflects disruptions to the motor industry in Germany from new fuel emissions standards.
 
There are also concerns about Italy, where financial markets have been unsettled by government plans to expand spending. There are continued weaknesses in the country's banking system as well.
 
Brexit uncertainty:
 
The outlook for the UK is especially uncertain, although there is a small upward revision to the forecast for next year. The 2019 figure is unchanged.
 
The predictions are based on the assumption that a Brexit deal is reached this year and that there is a gradual transition to the new relationship with the European Union. The IMF has warned before that a no-deal Brexit would involve substantial costs for the British economy.
 
Why China's slowdown should worry us all
Clouds gathering over the global economy
There are also a range of factors that weigh on the outlook for some emerging and developing economies. Iran is affected by sanctions, Saudi Arabia by weaker oil production.
 
The economies of both Turkey and Argentina are predicted to contract, as is Venezuela's, but it is likely to be even more severe in that case than previously expected.
 
All that said, the main global forecast of 3.5% does, nonetheless, still constitute a respectable increase in economic activity.
 
But the concern that it might not turn out so well is unmistakable.
 
Trade tensions appear to be the biggest worry and they have been a recurrent theme in recent IMF assessments of the economic outlook. That is reflected in the IMF's call for action from its member countries' governments.
 
"The main shared policy priority is for countries to resolve co-operatively and quickly their trade disagreements and the resulting policy uncertainty, rather than raising harmful barriers further and destabilising an already slowing global economy," the IMF said.
 
The report recalls that in its October forecast, there had already been a downgrade, partly due to the impact of the tariff increases enacted by the US and China.
 
'Escalating risks'
The IMF also says there are risks from financial markets.
 
The IMF's chief economist, Gita Gopinath, said: "While financial markets in advanced economies appeared to be decoupled from trade tensions for much of 2018, the two have become intertwined more recently, tightening financial conditions and escalating the risks to global growth."
 
In addition to global trade tensions, the report mentions a more substantial slowdown in China and a no-deal Brexit as possible triggers for a future deterioration in financial markets.
 
The general thrust of this report is that the IMF expects the recovery from the great recession of 2008-09 to continue. But the clouds, though, are gathering.
 
 
 
Source: BBC
Growth of the world economy is expected to slow as the US-China trade conflict takes its toll and undermines confidence, the World Bank said Tuesday in its semi-annual forecast.
 
The World Bank cut the global GDP forecast to 2.9 per cent this year and 2.8 per cent in 2020, slightly below the previous forecast, but warned that risks were rising and urging policymakers to prepare for a storm.
 
US economic growth is expected to slow this year by four-tenths of a point, falling to 2.5 per cent down from 2.9 per cent in 2018, and to slow even further next year to 1.7 per cent, according to the Global Economic Prospects report.
 
 
 
Source: Business Insider
The World Bank has predicted that Nigeria’s Gross Domestic Growth, GDP, will expand by 2.2 percent in 2019.
 
The World Bank made the prediction in its annual Global Economic Prospects published on Wednesday.
 
The prediction slightly upgraded the country’s projected growth rate from 2.1 per cent in June 2018.
According to the World Bank, growth in sub-Saharan Africa would accelerate to 3.4 per cent in 2019, due to improved investment in large economies together with continued robust growth in non-resource intensive countries.
 
“Per capita growth is forecast to remain well below the long-term average in many countries, yielding little progress in poverty reduction.
 
“Growth in Nigeria is expected to rise to 2.2 per cent in 2019, assuming that oil production will recover and a slow improvement in private demand will constrain growth in the non-oil industrial sector.
 
“Angola is forecast to grow 2.9 per cent in 2019 as the oil sector recovers as new oil fields come on stream and as reforms bolster the business environment.
 
“South Africa is projected to accelerate modestly to a 1.3 per cent pace, amid constraints on domestic demand and limited government spending,” the bank said.
 
The World Bank report, while dwelling on the risk to the region’s growth, said escalated trade tensions between the United States and China could impact negatively on the region.
 
“Faster than expected normalisation of advanced economy monetary policy could result in sharp reductions in capital inflows, higher financing costs and abrupt exchange-rate depreciation.
 
“Increased reliance on foreign currency borrowing has heightened refinancing and interest rate risk in debtor countries,” the noted.
 
The report further stated that domestic risks remained elevated and that political uncertainty and a concurrent weakening of economic reforms could continue to weigh on the economic outlook in many countries.
 
“In countries like Mozambique, Nigeria, and South Africa holding elections in 2019, domestic political considerations could undermine the commitments needed to rein in fiscal deficits, especially where public debt levels are high and rising.
 
 
Source: The Ripples

The World Bank Group president, Jim Yong Kim, on Monday announced he would be stepping down from his position effective February 1.

Mr Kim’s announcement is coming more than three years ahead of the end of his tenure in 2022.

“It has been a great honour to serve as President of this remarkable institution, full of passionate individuals dedicated to the mission of ending extreme poverty in our lifetime,” Kim said his statement on Monday.

In his place, the World Bank Group CEO, Kristalina Georgieva, will assume the role of interim president effective February 1. Mr Kim said the work of the World Bank Group is more important now than ever as the aspirations of the poor rise all over the world.

He said problems like climate change, pandemics, famine and refugees continue to grow in both their scale and complexity. 

“Serving as President and helping position the institution squarely in the middle of all these challenges has been a great privilege,” Kim said.

As World Bank President since July 2012, the outgoing World Bank Group head noted infrastructure finance as one of the greatest needs in the developing world. He said he led the Group to mobilize its financing by working with private sector partners to build sustainable, climate-smart infrastructure in developing nations.

Immediately after his exit, Mr Kim said he would join a firm focussing on increasing infrastructure investments in developing countries. He said details of his new position would be made public later. 

Under his Presidency of the Group, Mr Kim said the World Bank set the target of ending extreme poverty by 2030 and to grow shared prosperity, by focusing on the 40 percent of the population in developing countries.

Besides, he said the Bank enjoyed strong support from shareholders to better position it to respond to the development needs, particularly its Fund for the poorest, the International Development Agency (IDA), which achieved record replenishments that enabled it increase its work in areas suffering from fragility, conflict, and violence.

The federal government of Nigeria says the 36 state governments and the Federal Capital Territory (FCT) will soon access World Bank’s $750 million grant.
 
The Minister of Finance, Zainab Ahmed, disclosed this at the 7th Community of Practice (CoP) for State Commissioners of Planning and Budgeting, in Abuja, with theme, ‘Achieving Realism in State and Federal Budgets for Effective Service Delivery.’
 
Mrs Ahmed, who found CoP in September 2016, as then Minister of State for Budget and National Planning, was invited to speak on issues concerning the group.
 
She expressed optimism that states will continue with their fiscal responsibility to serve as a platform to access the loan and grant from the World Bank.
 
The Community of Practice meetings, she said, enhances the state commissioners of planning and budget’s capabilities in performing their functions, and serves as platforms for facilitating peer learning and information exchange, strengthening coordination, collaboration and networking.
 
Issues being discussed at the 7th CoP meeting include expanding the forum beyond the current membership to include the minister of finance and commissioners of finance from states for better coordination and planning, budget and public finances.
 
She said: “During the course of these meetings we had the benefit of hosting the World Bank and several other opportunities, including the Governors’ Forum,” the minister said in a statement sent to PREMIUM TIMES.
 
“During the course of this exercise, the Ministry of Finance had to on instruction from the President provide bailouts to the state because at one point states were not able to pay salaries.”
 
Part of the conditions given for those bailouts, the minister explained, is a fiscal responsibility plan which need to be implemented for the states to continue to be qualified to access the funds that the federal government was giving.
 
The FSP, she noted, was quite successful because of improvements in the public financial management in a lot of states, some of which is evidenced in the increase in internally generated revenue and increase in the frequency of the preparation of financial statements in budgets.
 
This year, she said, it was so good that the World Bank acknowledged what the group has done by approving about $750mn in the form of concession loans and grants that will be available soon for the states to access.
 
She said the loans and grants are in the process of going to the Executive Council Federation (FEC) for approval.
 
She said the World Bank has already approved the grant and others, while government expects the states will continue to implement their fiscal responsibility to qualify them for this facility as well as the grant.
 
According to the minister, the principles agreed by NEC on the operations of the group were still as relevant as they were in 2016.
 
She urged the CoP to ensure the monitoring aspect of the principles still continue.
 
She charged the CoP to make monitoring of the process of implementation of budget a cardinal principle, because it would benefit and enhance what they are doing to improve the standard of living of the people in their states.
 
“Let me add that the need for monitoring is beneficial, because it will enhance process improvement. It will also help us to refocus ourselves as well as our principles to stay on those commitments that are made. But, most importantly, it will enhance public service delivery to the citizens,” she stated.
 
 
Source: NAN
Strengthening mechanism for increased internal revenue generation is critical to the expected increased revenue in the non-oil sector, Yue Man Lee, World Bank Senior Economist, has said.
 
Lee said this on Tuesday in a paper she presented at the ongoing 3-day National Council on Finance and Economic Development conference, holding in Kaduna.
 
The paper was entitled “Strengthening States Revenue Performance through Transparency and Open Government.’’
 
Lee observed that Nigeria’s revenues were very low due to contraction in oil revenues and the stagnancy in the non-oil revenues which she attributed to the absence of stable tax policy reforms and weak tax administration.
 
She said that with no improvement in revenue collection, total spending would decline; debt would increase while fiscal space would shrink.
 
The expert noted that the government could not deliver on its social and development agenda without it increasing total public spending.
 
According to her, the only mechanism to increase government expenditure in a sustainable way is to triple total revenue through mobilising non-oil revenue.
 
“However, Nigerian tax perception survey shows low tax compliance due to weak transparency and accountability.
 
“Corporate income tax is less than six per cent of registered taxpayers, personal income tax shrinks to two per cent, while compliance in the case of VAT varies between 15 and 40 per cent.
 
“This is worrisome because low tax compliance reduces states revenues and strengthening revenue and increasing expenditure efficiency needs to be underpinned by an increase in transparency and accountability.”
 
Lee, however, said that the Nigerian states could increase transparency and accountability to strengthen IGR through harmonisation of revenue collection and automation of tax payment.
 
“Kwara and Kaduna States are good example of states where such reforms were initiated with a significant increase in IGR,” she said.
 
Meanwhile, the Accountant-General of the Federation, Ahmed Idris, said that automated collection and management of non-oil revenue was critical to increasing its performance in revenue generation and sustenance.
 
 
(NAN)
 
The World Bank has lowered its growth forecast for Nigeria’s economy in 2018 to 1.9 percent as the growth continued to downsize in the oil and agriculture sector.
 
The latest estimate is 0.2 percent points lower than 2.1 percent growth the global financial body earlier projected for the nation’s economy in April.
 
The world bank said its decision to cut Nigeria’s 2018 growth estimate was occasioned by the reduction in the production volume of crude oil, the country’s main source of revenue, and contraction in the agricultural sector of the economy which was largely driven by the herder-farmer clashes.
 
“In Nigeria, declining oil production and contraction in the agriculture sector partially offset a rebound in the services sector and dampened non-oil growth, all of which affected economic recovery.
 
“Nigeria’s recovery faltered in the first half of the year. Oil production fell, partly due to pipeline closures.
 
“The agriculture sector contracted, as conflict over land between farmers and herders disrupted crop production, partially offsetting a rebound in the services sector and dampening non-oil growth,” the bank stated.
 
According to the National Bureau of Statistics (NBS), the oil sector of the economy contracted by -3.95 percent in the second quarter of 2018 from a year earlier, while the non-oil sector grew by 2.05 percent in real terms during the reference quarter.
 
The drop in the oil sector impeded growth in the Nigerian economy to 1.50 percent in the quarter down from 1.95 percent recorded in the preceding quarter.
 
Available statistics from NBS shows that the nation’s agricultural sector grew by 1.19 percent from a year earlier in real terms in the second quarter of 2018, representing a decrease by –1.82 percent points from the corresponding period in 2017.
 
The data further shows that Nigeria’s average daily oil production volume dropped in Q2 2018 to 1.84 million barrels per day after recording an average production volume of two (2) million barrels per day in the previous quarter.
 
The contraction in the Crude oil and Gas sectors was attributable to some production issues which, according to the Minister of Budget and National Planning, Sen. Udoma Udo Udoma, were being addressed by the Nigerian National Petroleum Corporation (NNPC).
 
But the Minister of State for Petroleum, Ibe Kachikwu, had last month noted that the decision to raise or cut production volume would be largely dependent on the prices of crude in the international market.
 
This indicates that there may soon be a rebound in the country’s crude oil production volume as the Brent crude, against which Nigeria’s oil is priced, hit its highest level of $84 per barrel since November 2014 last Monday.
 
The development was occasioned by supply concerns in the international market ahead of United States sanctions on Iran’s oil sector expected to take effect from next month.
 
 
Source: Business linking

Sluggish expansion in Nigeria, Angola and South Africa – Africa’s three largest economies – is expected to dampen the growth prospects for Sub-Saharan Africa to 2.7 percent in 2018, according to the World Bank which has also warned of increasing public debt in the region.

The World Bank says it now expects Sub-Saharan Africa economies to grow by 2.7 percent in 2018, lower than the 3.1 percent it had projected for the subregion earlier in April.

The World Bank notes that Sub-Saharan African economies are still recovering from the s2015-2916 slowdown, but growth is still slower than expected.

“The slower pace of the recovery in Sub-Saharan Africa (0.4 percentage points lower than the April forecast) is explained by the sluggish expansion in the region’s three largest economies, Nigeria, Angola, and South Africa,” the World Bank said in the Africa Pulse published on Wednesday ahead of the Annual meetings of the International Monetary Fund (IMF) and World Bank scheduled to begin in Bali, Indonesia on Monday, October 8.

The estimated 2.7 percent average growth rate in the region is however, a slight increase from 2.3 percent recorded in 2017.

“The region’s economic recovery is in progress but at a slower pace than expected,” said Albert Zeufack, World Bank Chief Economist for Africa.

“To accelerate and sustain an inclusive growth momentum, policy makers must continue to focus on investments that foster human capital, reduce resource misallocation and boost productivity. Policymakers in the region must equip themselves to manage new risks arising from changes in the composition of capital flows and debt.”

According to the World Bank, Slow growth is partially a reflection of a less favorable external environment for the region.

Global trade and industrial activity lost momentum, as metals and agricultural prices fell due to concerns about trade tariffs and weakening demand prospects. While oil prices are likely to be on an upward trend into 2019, metals prices may remain subdued amid muted demand, particularly in China.

Also, Financial market pressures have intensified in some emerging markets and concern about their dollar-denominated debt has risen amid a stronger US dollar.

Besides, Lower oil production in Angola and Nigeria offset higher oil prices, and in South Africa, weak household consumption growth was compounded by a contraction in agriculture. Growth in the region – excluding Angola, Nigeria and South Africa – was steady.

The Bank further notes that Several oil exporters in Central Africa were helped by higher oil prices and an increase in oil production.

Economic activity remained solid in the fast-growing non-resource-rich countries, such as Côte d’Ivoire, Kenya, and Rwanda, supported by agricultural production and services on the production side, and household consumption and public investment on the demand side.

“Public debt remained high and continues to rise in some countries,” the World Bank further notes – amid heightened concerns that about 40 percent of low income countries in Sub-Saharan Africa region are already in debt distress or in high risk of debt crisis.

The IMF for instance worried that for low income countries, including Nigeria, governments have embarked on excessive borrowing to fund development, especially as incomes dwindled for commodity prices- and is now strongly advising on an aggressive tax mobilisation.

“Vulnerability to weaker currencies and rising interest rates associated with the changing composition of debt may put the region’s public debt sustainability further at risk,” the World Bank says in the latest report.

Other domestic risks include fiscal slippage, conflicts, and weather shocks. Consequently, policies and reforms are needed that can strengthen resilience to risks and raise medium-term potential growth.

This issue of Africa’s Pulse highlights sub-Saharan Africa’s lower labor productivity and potentials for improvement

“Reforms should include policies which encourage investments in non-resource sectors, generate jobs and improve the efficiency of firms and workers,” said Cesar Calderon, Lead Economist and Lead author of the report.

 

- Businessday

The World Bank on Friday expressed its willingness to provide technical support to Nigeria in critical areas to facilitate the country’s economic growth and development.
 
The bank’s Vice President for African Region, Mr Hafez Ghanem said this in a statement issued by Mr James Akpandem, Special Adviser to the Minister of Budget and National Planning in Abuja.
 
Ghanem spoke when he visited the Minister of Budget and National Planning, Sen. Udoma Udo Udoma.
 
He said the Bank would provide technical support for Nigeria in the areas of the Economic Recovery and Growth Plan (ERGP) Mid-term Review, Power Sector Reform, Public-Private Partnerships (PPPs), and population management.
 
According to him, the bank will also provide technical support for ERGP delivery, performance tracking and reporting, capacity building for sector officials and economic modelling for policy analysis and forecasting.
 
Ghanem also pledged the bank’s commitment to increase its support for Nigeria’s Social Investment Programme.
 
The World Bank chief reiterated that he was in Nigeria to discuss with relevant Nigerian officials regarding the areas Nigeria would like to receive additional support from the bank.
 
He acknowledged that the present administration in Nigeria had shown commendable commitment in growing the economy.
 
Ghanem pledged that he would ensure Nigeria had an opportunity to speak about its economic progress at the annual meetings of the World Bank/International Monetary Fund (WB/IMF) scheduled for later in the year in Indonesia.
 
While receiving Ghanem, the Minister told him that the ERGP was Nigeria’s medium-term plan (2017 – 2020) that articulates government’s vision for the country.
 
Udoma said the plan also laid the foundation for Nigeria’s long-term economic growth.
 
He said the present administration had to set very aggressive targets in order to meet the serious challenges caused principally by the collapse in crude oil prices.
 
“Indeed, the collapse of crude oil prices exposed how dependent the economy is on commodity exports.
 
“The ERGP was therefore developed to reform the economy so as to reduce its reliance on a single commodity and place it on the path of sustained, diversified and inclusive growth.
 
“With the introduction of the ERGP, the economic decline has been reversed; the economy has emerged from recession and is beginning to grow again,” he said.
 
The minister said that in spite of the positive economic news, there was much more to be done to achieve the targets set in the ERGP.
 
He said the government was focused on accelerating the implementation of the various initiatives in the ERGP and would soon commence a mid-term review of the plan.
 
He said Nigeria would appreciate technical assistance in the areas of Power Sector Reform and PPPs, ERGP as improvements in these areas were critical to achieving the rapid transformation of the economy.
 
He pointed out that although a large population could be an asset, a high population growth rate could pose a challenge for any country.
 
According to him, Nigeria’s rate of population growth needs to be moderated as one of the means of ensuring that the benefits of economic growth have the desired impact and improves the welfare of all the people.
 
“In that connection, Nigeria can benefit from the experience of countries that have had success in managing their population growth.”
 
Udoma asked for assistance from the World Bank in arranging for Nigeria to have access to relevant information on the best and most successful methods of achieving success in this area.
 
The minister also expressed appreciation for the support the World Bank, the International Finance Corporation (IFC) and other development partners had been rendering toward the development of the ERGP.
 
He appealed to the IFC to redeem the pledge to provide funding support for some of the projects identified during the ERGP Focus Labs.
 
‘It will be appreciated if the Vice President of World Bank can help designate a special session during the forthcoming IMF/World Bank meetings in Indonesia to enable Nigerian representatives to speak to participants about the ERGP.
 
“This will enable us to attract more investments into Nigeria to further facilitate the achievements of the objectives and targets of the Plan’
 
The statement also said the Minister of State, Mrs Zainab Ahmed, appreciated the bank’s assistance in the area of security, social investment and the cash transfer programme.
 
Ahmed urged for more support, especially in the management of Nigeria’s growing population and inclusive growth.
 
She said if Nigeria succeeded in the Sustainable Development Goals (SDGs) programme, it would make a major contribution to the continent as it would meet the targets set for Africa.
 
 
Source: The Guardian
 
Representatives of Austria, Germany and Switzerland have reiterated commitment to expanding business activities and workforce in Nigeria, following the recent ranking by the World Bank Ease of Doing Business index which placed the country among the 10 most improved economies.
 
The delegate of German Industry and Commerce in Nigeria, Marc Lucassen, said foreign businessmen were optimistic about the economic climate in Nigeria, noting that German companies were becoming more interested in the market.
 
At the third presentation of Austria-German-Swiss Business Outlook (AGSBO) in Lagos on Wednesday, Lucassen said though Nigeria moved up 24 points in the World Bank Ease of Doing Business index and was among the 10 most improved economies, its business prospects in the next one year might be static.
 
According to the survey, 47.2 per cent expressed strong believe in general growth of businesses before the end of the year, as against the 8.3 per cent, who thought otherwise.
 
Lucassen, however, stressed that finding skilled workforce, especially in the field of engineering, was a major challenge, hence, most foreign companies result to recruitment and training of staff in-house.
 
“Nigeria has to invest heavily in education, as human capital is key for industrialization and diversification,” he advised.
 
He listed the major factors affecting investment activities in the country as forex supply, transport infrastructure and security.
 
The Deputy Consul General of the German Consulate General in Lagos, Ms. Alexandra Herr, said a German business desk was launched last year at Access Bank in Lagos in conjunction with the Deutsche Investitions-und Entwicklungsgesellschaft (DEG), aimed at addressing the particular needs of German firms and their local partners seeking financing solutions to enter the Nigerian market.
 
“I am confident that the interest in the Nigerian market will continue to translate into a series of initiatives, including visits of trade delegations in the months to come.
 
We will continue to work tirelessly in order to promote our bilateral trade relations,” she said.
 
 
Source: The Guardian
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