Tariff War: Nigeria, Others May Face Budget Constraints – World Bank

With the rising uncertainties due to the ongoing tariff wars, Nigeria and other emerging economies who are reliant on commodity exports are likely to experience budgetary pressures, the president of the World Bank Group, Ajay Banga  has cautioned.

Speaking during a virtual briefing ahead of the 2025 World Bank/ International Monetary Fund Spring Meetings, Ajay noted that the budgetary challenges may arise as global trade tensions escalate and economic growth slows.

The World Bank president warned that ongoing trade wars between major economies are injecting uncertainty into global markets, with uneven effects expected across developing countries, particularly in Sub-Saharan Africa.

In response to question on growth projections for emerging economies in Sub-Saharan Africa particularly in Nigeria due to the ongoing trade wars, he said: “Definitely there’s uncertainty and vulnerability; you will get reductions in global growth.

“I think the impact on different countries will be different. It’s a little difficult to predict exactly where that will go, country by country right now, because, for example, if you’re exposed to commodity exports, and if the prices of commodities come down because of a reduction in global growth, then you will have a challenge with the budget of that country.

“On the other hand, if you’re a smaller emerging market or a market that isn’t as well integrated into the system, or your domestic consumption is a higher percentage of your of your GDP than your exports, and therefore different balance of growth in your country, then it’s a different impact.

“We’re kind of going to have to work our way through that over the coming weeks, depending on how this uncertainty plays out, but overall, for the global economy, certainly uncertainty will lead to a slower growth than it was a few months ago.”

He also noted that uncertainty and volatility are contributing to a more cautious economic and business environment.

“I think that’s going to affect our governments and businesses make their investment decisions right now.

“Developing economies are playing a far more central role in global trade than they did, say, two decades ago. And in that time, global trade has nearly quadrupled in nominal terms, and that share of the developing countries in that trade has nearly doubled from what a fifth to almost two fifths. And again, half of the exports now go to other developing countries. Time back in 2000, that was just one quarter. I think this shift brings both an opportunity and exposure.

“Countries with export led growth models, particularly those reliant on commodities or manufactured goods, they’re much more vulnerable to disruption, but they also have policy levers to help manage the uncertainty and position themselves for a longer term resilience,” he said.