Prior to the Spring Meetings of the World Bank and International Monetary Fund, yesterday’s media appearance by World Bank Group President David Malpass included the forecast. (IMF).
The forecast was a sneak preview of the April World Bank Economic Outlook, which will be released today afternoon.
The upward projection changes, according to Malpass, are predicated on China ending its lockdown strategy and advanced economies performing “somewhat better than expected” in January of this year.
The head of the World Bank indicated that instead of the 2.1% growth seen last year, the United States’ gross domestic product (GDP) is forecast to expand by 1.2% this year.
The most recent banking stress, according to him, “dampens activity” and casts doubt on development prospects, is one of the drawbacks of expansion.
The banking crisis is a hot topic at the Spring Meetings, where participants are expected to discuss the implications of the potential threat posed by failing banks to the global financial system.
The simultaneous failure of two banks in the United States and the escalating unrest in Switzerland have sparked concerns about the stability of the financial system and its ability to withstand severe economic shocks.
Experts have urged central banks to prioritize financial system stability and slow down or stop raising interest rates. However, the Federal Reserve System continued with a rate hike at its meeting in March despite having increased the liquidity line to save the banking industry.
The abrupt rate hike is already permeating statistics globally, with the US labor market, for instance, exhibiting symptoms of sluggishness in March.
At home, the maximum loan rate has crossed 28% while Nigeria’s monetary policy rate (MPR) has reached a multi-decade high of 18%.
According to experts, the interest rate would need to be reduced to offer the private sector more breathing room. Manufacturing and agriculture are the bane of the nation’s output growth, with credit to the real sector’s stagnation or slow development during the previous ten years.
Nigeria’s growth prediction was reduced by the bank to 2.9% in January as a result of the country’s increasing risks and weak performance in crucial industries like petroleum.
However, its sister organization (IMF) revised its earlier prediction of the country’s output growth rise to 3.2 percent from three percent.
Local economists predict that the country’s macroeconomic policies will undergo a significant transformation after the change in leadership that will occur next month, and that the sluggish growth of the previous eight years may significantly improve.
The country’s potential to accelerate growth is stymied by the ineffectiveness of the electricity sector, the rigidity of the foreign currency market, and the unfavorable tax structure, for which the Bretton Woods institutions have called for extensive and ambitious reforms.
This week, important members of the monetary and fiscal authorities will attend the Spring Meetings to discuss the development of the nation’s reform initiatives.
