NIGERIA and Ghana have been assessed to be among the three fastest growing markets among the 25 leading rapid-growth ones in the world in the next two years, a report just released by Ernst and Young has revealed.
According to the global body in its quarterly Rapid-Growth Market Forecast (RGMF), economic expansion in the 25 leading Rapid Growth Markets (RGMs) has started to slow sharply since the beginning of this year but this will only be a temporary blip.
However, Ernst & Young believes that the power sector holds the key to Nigeria’s economic growth and development.
It stated: “There is a mixed picture emerging across the world. Although Asia is likely to lead the way, Africa remains resilient overall, with Ghana and Nigeria among the three fastest growing of the RGMs this year.
“However, Central and Eastern Europe and Latin America are hindered by the slow growth in their key export markets of the Eurozone and United States respectively. If the Eurozone should fall further into recession, RGMF predicts that the Czech Republic and Poland would be pushed into recession, with Hong Kong and Malaysia also hit hard due to their dependence on global trade.
“RGMs, particularly in Asia, have the necessary tools available to ease both fiscal and monetary policy, allowing growth to resume towards the end of the year.”
It added that even with a slowdown in growth, RGMs are likely to weather the Eurozone crisis and will remain the engine of global growth.
According to the report, Gross Domestic Product (GDP) is expected to expand by 4.9 per cent this year in stark contrast to the 0.6 per cent contraction, at best, that is expected in the Eurozone. Output in the RGMs is expected to continue to pick up by 6 per cent in 2013 and 6.5 per cent in 2014.
Senior Economic Adviser to Ernst & Young’s Rapid Growth Markets Forecast, Carl Astorri explained: “The RGMs are well placed to weather the major risks facing the global economy at the present time, given that they have the space to relax fiscal and monetary policy. This has already happened in some RGMs including in all of the BRICs. It is likely that there will be further easing of monetary policy in the months ahead, particularly if the global economy deteriorates further.”
Co-leader of the Emerging Markets Centre at Ernst & Young, Alexis Karklins-Marchay stressed that “although slower expansion in the rapid-growth markets is likely this year it will only be a blip and we will see a return to significant growth towards the end of the year. Soaring domestic demand in economies starved, for some time, of investment and consumption will offer business exciting new markets for goods and services in the years ahead.”
He added that “despite the slowdown in growth experienced by the RGMs at the beginning of this year they will begin to bounce back towards the end of this year and in 2013. The ability to relax policy to boost growth, a growing middle class to aid consumer spending and a strong rise in FDI flows will ensure continued growth well into the future.”
Senior Partner, Transaction Advisory Services, Ernst & Young, Nigeria, Bisi Sanda, on the other hand, believes that power sector holds the key to the Nigeria’s economic growth and development.
“If the government of Nigeria completes its privatisation of the power sector assets in 2012, it will provide much required fresh breath to the much delayed reactivation of stimulus of the manufacturing sector, including the reactivation of over 100 textile mills that closed down or relocated from Nigeria between 2000 and 2007. Power is an enabler in Nigeria,” he stated.
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