18 January 2013

Nigeria to Rank 13th Among World's Top 20 Economies By 2050

Photo: The World Bank
A Growing African Economy.

Nigeria has been projected to rank 13th among the world's top 20 economies by 2050, given its potentials.

According to a report titled: "World in 2050," published by PwC's macroeconomics team, Nigeria and other emerging economies, including Vietnam, India, Indonesia, Malaysia, China, Saudi Arabia and South Africa are set to grow much faster than the G7 countries - France, Germany, Italy, Japan, the United Kingdom, the United States and Canada over the next four decades.

The report noted that with a projected Gross Domestic Product (GDP) of nearly $4 trillion by 2050 and an annual average real GDP growth rate of about 6 per cent, as well as a youthful and growing working population, Nigeria is projected to rank among the world's largest economies by 2050 if it can realise its full potential.

The report stated that a growing, prime working age population, together with rising average rates of schooling and technological progress, drive Nigeria's strong growth prospects.

But the report's projections relied on the country using its oil wealth to develop a broader-based economy with better infrastructure and institutions - regarding rule of law and political governance - which will support long term productivity growth.

A partner with PwC Nigeria, Andrew S. Nevin, said: "Nigeria's projections for population, education levels and technological progress are very strong. Nigeria lags behind with regard to its investment rate, however. Productivity is lower in Nigeria due to weaker infrastructure and institutions, as well as an over-reliance on oil revenues. By investing in these areas and diversifying its economy, Nigeria can realise its full potential by 2050.

"Over the past decade, the private sector has played an enormously positive role in sectors like telecoms, retail and financial services in Nigeria and throughout Africa.

"For Nigeria to realise its potential, it is going to require governments at the state and federal levels to play their roles in fostering the right type of environment, including improvements in the rule of law, greater transparency and strengthening of the health and education systems, and enabling the development of key sectors, with power being the most important. Many strides have been made in this regard and they need to keep coming."

Also, PwC Chief Economist and co-author of the report, John Hawksworth, noted: "The shift in the global economic centre of gravity is clear. The E7 (seven emerging economies) could overtake the G7 before 2020, and by 2050 China, the US and India could be by far the largest economies - with a big gap to Brazil in fourth place, ahead of Japan. By the same time, Russia, Mexico and Indonesia could be bigger than Germany or the UK; Turkey could overtake Italy; and Nigeria could rise up the league table, as could Vietnam and South Africa in the longer term.

"There are huge opportunities for Western companies in the emerging markets - but also great competitive challenges from fast-growing emerging market companies. Governments also face huge challenges, not least in relation to global warming as a result of this rapid pace of economic development."

The report listed growth estimates as driven by: growth in the labour force, as proxied by UN projections for working age population; growth in the quality of labour, which is assumed to be related to current and projected average education levels in the workforce; growth in the physical capital stock, which is determined by new capital investment less depreciation of the existing capital stock; and technological progress, which drives improvement in total factor of productivity.a

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