WORLD BANK FORECASTS A 9.1% GROWTH FOR NIGERIA IN 2008

The World Bank has predicted 9.1 per cent growth in Gross Domestic Product (GDP) for Nigeria in 2008, a report released by the bank Tuesday said.

In the World Economic Outlook released by the bank, Nigeria should use fiscal policy supported by appropriate monetary policies targeted at improving the economic prospects of the poor and of future generations.

The bank warned that Nigeria and other resource-rich countries to ensure that fiscal policy was carefully calibrated to keep buildups in spending from export earnings in line with the economy’s absorptive capacity and consistent with fiscal sustainability.

According to the bank, high oil prices had helped Nigeria’s revenue despite supply disruptions in the Niger Delta.

According to the report, favorable environment has made some countries in sub Saharan Africa increasingly attractive as destinations for private capital inflows.

"Net private capital inflows reached record levels in 2007, by strong FDI inflows. However, the bulk of FDI is still focused on a few countries and targeted mainly at extractive industries, particularly the petroleum sector, based on evidence from cross-border mergers-and acquisition related inflows-an important fraction of gross FDI inflows," the report explained.

According to the report, tighter global financial market conditions can also slow the pace of capital inflows and investment into the region. It warned that in a number of countries, political and security risks remain important.

"The main policy challenges for the region are to maintain progress toward increasing integration with the global economy and to reduce poverty in the context of a less-friendly global environment," it added.

While acknowledging that globalization is positively associated with a reduction in inequality in developing countries, the report said more needed to be done to allow all segments of the population to benefit from the region’s strong growth performance.

"At the same time, it is important to reduce the region’s vulnerabilities to commodity-market-led downturns, which disproportionately affect the poor.

Macroeconomic policy frameworks need to be further strengthened and supported by reforms to build on recent progress in improving the business environment and institutions," it added.

The bank said that further progress in trade integration needed to be complemented with financial sector reform to broaden the private sector’s access to financial and banking services and to tools for managing risk, in order to allow economies to take fuller advantage of the increasing opportunities.

April 10, 2008