The World Bank has cut Nigeria’s economic growth forecast for this year,
citing weakness from oil-output disruptions and low prices.
bank, in its semi-annual Global Economic Prospects report, expects
Nigeria to grow by 0.8 per cent, down from an estimate of 4.6 per cent
in January. Growth could pick up to 3.5 per cent in 2017, it said.
exchange restrictions, fuel shortages and a plunge in oil production
and prices had hit the economy, the World Bank was quoted by Reuters to
have stated in the report.
The country’s economy contracted for
the first time since 2004 in the first quarter of this year and the
Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, warned in May
that a recession was imminent after a four-month delay in the nation’s
budget stalled economic stimulus programmes.
Faced with the oil
price slump, the key source of government revenue, the central bank has
restricted access to foreign exchange. The country has held its
currency, the naira, at 197-199 per dollar since March 2015, unlike some
other oil producers that have let their currencies weaken.
CBN’s Monetary Policy Committee had two weeks ago, after its meeting,
announced plans to adopt a flexible exchange rate. But the blueprint for
the proposed policy has yet to be released, putting further pressure on
the naira at the parallel market.
The country is currently
plagued by oil supply woes, as a resurgence of attacks by militants on
oil and gas facilities in the Niger Delta has driven crude output to its
lowest level in nearly three decades.
The Africa and Middle East
Economist, Bloomberg, Mark Bohlund, in a new report, said the Nigerian
economy was at risk of experiencing its first full-year recession since
1987, after output contracted by 0.4 per cent in the first quarter from a
He said a drop in oil output to a 27-year low and
paralysis in other sectors due to fuel and foreign exchange shortages
meant that economic growth was likely to remain negative for the rest of
The naira devaluation is unlikely to help much, with its beneficial impact expected beyond the end of this year, he said.
said, “The first quarter contraction does not come as a surprise, but
the drop in oil production was actually less damaging to activity than
anticipated, dragging on real Gross Domestic Product growth by only 0.2
percentage point in the period compared with 0.7 percentage point in the
fourth quarter and 0.6 percentage point in 2015.
was manufacturing that experienced the sharpest drop in activity,
falling by seven per cent year over year. This is likely to have been
partly connected to a decline in domestic demand but also to the
difficulties of importing input materials due to foreign exchange