A report by Goldman Sachs has forecasted that Nigeria will become the fifth largest global economy in the world by 2075, with a gross domestic product (GDP) of $13.1 trillion.
The report, titled “The Path to 2075 — Slower Global Growth, But Convergence Remains Intact”, covered 104 countries and identified four major themes for the global economy. The report projected that the global growth rate will average a little under 3 percent per year over the next ten years and will be on a gradually declining path, primarily reflecting slower labour force growth.
One of the factors used in the projection is the population per country. The report revealed that global population growth has declined by more than half over the past 50 years, from 2.1 percent per year to 1 percent per year, and is expected to fall to 0.1 percent per year by 2075.
The report estimated that the world’s five largest economies in 2050 (measured in real USD) will be China, the US, India, Indonesia and Germany (with Indonesia displacing Brazil and Russia). But by 2075, with the appropriate policies and institutions, Nigeria, Pakistan and Egypt could be among the world’s largest economies.
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The United States, the current largest economy, as Goldman Sachs’ report stated, will lose its place to China by 2075. Even though the US’s relative performance has been stronger than expected over the past decade, history suggests it is unlikely to repeat this over the next decade.
The (global economy forecast) report expects some of the US Dollar’s exceptional strength of recent years to be unwound over the next 10 years.
According to Goldman Sachs, China will surpass the United States to be the largest global economy in the world by 2075, with a GDP of $57 trillion, followed by India with $52.5 trillion and the US with $51.5 trillion. Nigeria, currently ranked as the 27th largest economy in the world, will jump to the fifth position by 2075, with a GDP of $13.1 trillion.
Nigeria will benefit from its high population growth, which is expected to reach 1.1 billion by 2075, making it the third most populous country in the world after India and China. The report also stated that Nigeria will need to implement effective policies to harness its demographic dividend and overcome its current challenges, such as insecurity, corruption, poverty and infrastructure gaps.
Published on December 6, 2022, the Goldman Sachs report was based on various assumptions and factors, such as population growth, productivity growth, exchange rates, inflation rates, and policy reforms. Therefore, it cautions that the projections are subject to uncertainty and change over time.
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Nigeria’s economic situation and prospects
Nigeria is Africa’s leading economy, with a population of more than 219 million people. Its economy is highly dependent on oil and is very vulnerable to fluctuations in crude oil prices and production.
The West African country’s economy shrank by 1.92 percent in 2020 due to the COVID-19 pandemic and the fall in oil prices, but rebounded in 2021 and 2022 with growth rates of 2.0 percent and 2.4 percent, respectively. Nigeria’s inflation rate reached a 17-year high of 18.8 percent in 2022, driven by high food and energy prices, monetary policy distortions, and import restrictions.
Nigeria’s public debt to GDP ratio rose to 35 percent in 2022, according to Fitch Ratings. It also projected the ratio to increase to 40.2 percent at the end of 2024. The rising debt burden reflects the impact of the COVID-19 pandemic, low oil prices, and fiscal pressures on the Nigerian economy.
This year, the Nigerian government removed the fuel subsidy and later unified the exchange rates, which are expected to reduce fiscal pressures and improve macroeconomic stability. According to Goldman Sachs’ global economy forecast report, with progressive policies, Nigeria has the potential to become a regional and global leader in sectors such as agriculture, energy, manufacturing and digital services, if it can invest in human capital and innovation.
