Nigeria GDP to Worsen
World Economy

Nigeria GDP to Worsen

The International Monetary Fund’s 2016 economic outlook for Nigeria spells doom for the nation’s growth prospects, with the projection that gross domestic product would be far worse than it recorded in 2015.
The expectation of the improved GDP this year is projected to plunge further to 2.3% as against 2.7% in 2015, with non-oil sector growth projected to slow from 3.6% in 2015 to 3.1% in 2016 before recovering to 3.5% in 2017, Yahoo reported.
The fund under its 2016 Article IV Consultation bilateral discussion with Nigeria, by its executive board, which was posted on the multilateral agency’s website last Friday, projected GDP growth lowest since democracy returned in 1999.
IMF admitted that though the non-oil sector accounts for 90% of the nation’s GDP, the oil sector, amid the global price volatility, would still play a central role in the economy. The fund noted that lower oil prices have significantly affected Nigeria’s fiscal and external accounts, decimating government revenues to just 7.8% of GDP and resulting in the doubling of the general government deficit to about 3.7% of GDP in 2015.
Nigeria’s exports dropped about 40% in 2015, pushing the current account from a surplus of 0.2% of GDP to a deficit projected at 2.4% of GDP.
With foreign portfolio inflows slowing significantly, reserves fell to $28.3 billion at end-2015. Nigeria’s foreign exchange reserve is currently fluctuating at an 11-year-low, but the IMF posited that it would fall further to new lows at about $21.5 billion before the end of the 2016 fiscal year.

  Impact on Private Sector  
Foreign portfolio inflows slowing significantly, reserves fell to $28.3 billion at end-2015. Exchange restrictions introduced by the Central Bank of Nigeria to protect reserves have impacted significantly segments of the private sector that depend on an adequate supply of foreign currencies.
“Coupled with fuel shortages in the first half of the year and lower investor confidence, growth slowed sharply from 6.3% in 2014 to an estimated 2.7% in 2015.” The effect of all these was seen in the “weakening corporate balance sheets, lowering the resilience of the banking system, and likely reversing progress in reducing unemployment and poverty.”
While observing that Nigeria’s financial sector soundness indicators have remained favorable, IMF said that further strengthening of the regulatory and supervisory frameworks would help improve resilience now that operating costs and low earnings’ stream are dominating results.
“With declining asset quality, a concern as growth slows, intensified monitoring of banks and enhanced contingency planning and resolution frameworks would be important. Lowering interest rate spreads and increasing efficiency could enhance credit growth, especially for small and medium enterprises,” it noted.

Short URL : http://goo.gl/w3Nxgr
  1. http://goo.gl/GcQoc0
  • http://goo.gl/rsCxrX
  • http://goo.gl/Kycxr4
  • http://goo.gl/mYVnWG
  • http://goo.gl/VvFv6A

You can also read ...

Even though the US tariffs on their own may have a limited impact, global economic growth will slow should US trigger a trade war with  China or the European Union.
The volume of global trade grew faster than the world economy...
OECD Finds No Consensus on Interim E-Commerce Taxes
The Organization for Economic Cooperation and Development’s...
S. Arabia Among World’s Worst Performing Property Markets
Saudi Arabia’s real estate market continued to be one of the...
Greece Looking Economically Vibrant on Road to Recovery
It’s nearly springtime in Athens: street trees are heavy with...
Since China’s entry into the World Trade Organization in 2001, it has become the most formidable  economic competitor the United States had even seen.
The US national debt exceeded $21 trillion for the first time...
Merkel Says Trying to Boost Domestic Demand
Germany is trying to stimulate domestic demand to offset...
Gaza growth fell from 8% in 2016  to a mere 0.5% in 2017.
Gaza has seen conditions steadily deteriorate over the last...
ECB wants to keep headline inflation below,  but close to 2% year-on-year.
Eurozone consumer prices grew less than expected in February...