Developing countries including Nigeria have to brace up for a long period of volatility in the global economy as "global capital market and investor sentiment are likely to remain over the medium term, a newly-released World Bank report has said.
A statement signed by Bamidele Oladokun of the Nigeria office of the World Bank Group quotes the Global Economic Prospects (GEP) as saying "Economic growth in Sub-Saharan Africa remained robust in 2011 at 4.7 percent. Excluding South Africa, growth in the rest of the region was stronger, at 5.6 percent, making it one of the fastest growing developing regions."
According to the release the Director of Development prospects at the World Bank, Hans Timmer as said: "Global capital market and investor sentiment are likely to remain volatile over the medium term - making economic policy setting difficult. In this environment, developing countries should focus on productivity-enhancing reforms and infrastructure investment instead of reacting to day-to-day changes in the international environment."
The release said the World Bank is projecting the a slowed growth for the developing country.
"Increased uncertainty will add to pre-existing headwinds from budget cutting, banking-sector deleveraging and developing country capacity constraints," said the release. "As a result, the World Bank projects that developing country growth will slow to a relatively weak 5.3 percent in 2012, before strengthening somewhat to 5.9 percent in 2013 and 6.0 percent in 2014. Growth in high-income countries will also be weak, 1.4, 1.9 and 2.3 percent for 2012, 2013 and 2014 respectively - with GDP in the Euro Area declining 0.3 percent in 2012. Overall, global GDP is projected to rise 2.5, 3.0 and 3.3 (1) percent for the same period. "
"This baseline scenario remains the most likely outcome. However, should the situation in Europe deteriorate sharply no developing region would be spared. Developing Europe and Central Asia is especially vulnerable because of its close trade and financial ties with high-income Europe, but the world's poorest countries will also feel the fall out - especially countries that are heavily reliant on remittances, tourism or commodity exports or that have high-levels of short-term debt."
"Where possible, developing countries need to move to reduce vulnerabilities by lowering short-term debt levels, cutting budget deficits and returning to a more neutral monetary policy stance," advised Andrew Burns, Manager of Global Macroeconomics and lead author of the report. "Doing so will provide them with more leeway to loosen policy, should global conditions take a sharp turn for the worse."