Quoting a report published by BMI Research (a unit of Fitch Group), CNBC Africa has predicted that Nigeria along with Argentina, Indonesia, Saudi Arabia, Turkey and Taiwan will become a trillion-dollar economy by 2027.
According to the prediction, the six economies will grow to exceed $1 trillion in nominal GDP over the coming 10 years. They will join a number of emerging markets that have already achieved trillion-dollar-economy status: China, India, Brazil and Mexico. It is believed that the pace of expansion in the newcomers will vary greatly, underscoring our ‘reformers to outperform’ global theme. Out of the six, Indonesia and Argentina are set for swift economic growth and are closest to becoming trillion-dollar economies.
CNBC Africa notes that Indonesia is poised to cross the trillion-dollar threshold in 2018, thanks to its large domestic market and natural resource wealth, as well as ongoing (albeit slow-paced) structural reform efforts. Argentina is currently a long way from being a trillion dollar economy, but will leapfrog several others to achieve that status by 2019, according to our forecasts. Following the broad-based liberalisation of the economy under President Mauricio Macri, investment is strong and will increasingly translate into new productive activity, particularly in energy, infrastructure and real estate.
Turkey and Saudi Arabia are next in line to become trillion-dollar economies, but they will not achieve this until 2023 in our view, barring radical changes in policy. The Turkish economy looks set to suffer from weak investment amid rising authoritarianism and a widening budget deficit. Saudi Arabian growth will likely be curtailed by fiscal austerity and the underdevelopment of the non-oil sector.
For Taiwan and Nigeria, it is expected to take at least 10 years for them to become trillion-dollar economies. In Taiwan’s case, a number of structural factors are set to weigh on growth: an uncompetitive technology sector, a rigid labour market, deteriorating demographics and the slowdown in China (a key trade partner). Nigeria will suffer from a dearth of domestic capacity and critical reforms to the power, infrastructure and oil and gas sectors will be slow in coming.
With the Nigerian economy still deep in recession, experts believe the leadership of the country under President Muhammadu Buhari will have to make radical changes to its economic agenda to pull the economy out of recession and set it on the path of sustainable growth.
Critical to Nigeria’s extremely needed quantum leap in economic growth is the well-overdue diversification of its economy, away from excessive dependency oil.