The recent World Economic Outlook (WEO) report released by the International Monetary Fund (IMF) reveals that Nigeria’s economy will contract to -3.4% in 2020, falling from 2.2% projected in 2019.1 The Fund’s projection takes into cognizance the large drop in oil prices and impact of containment and mitigation measures on economic activities. The report also projects inflation to rise from 11.4% to 13.4%, government debt as a percent of GDP to increase from 29.4% to 35.3% and external reserves to fall from 6.1 to 3.9 months of import between 2019 and 2020. However, GDP and inflation are expected to rebound to 2.4% and 12.4% respectively in 2021. Going forward, the impact of the COVID-19 pandemic, through business travel and tourism, supply chains, commodities and lower confidence, will worsen the already bleak economic outlook. Nigeria’s economy will be particularly hard hit considering the intensity of the impact on China, a notable trading partner. The government should consider as priority, fiscal stimulus packages for the affected industries and workers and boost investment to accelerate recovery.
May 12, 2020
Nigeria Economic Update (Issue 16)
Recently released inflation rate report by the NBS shows a further decline in consumer price index in December 2017. At 15.37 percent, the CPI was 0.53 percentage points lower than the 15.90 percent recorded in November 2017. The food sub-index decreased to 19.42 percent from 20.21 percent, indicating reduced pressure on food prices in the review period. Core sub-index fell slightly to 12.1 percent from 12.21 percent in the preceding month. Going forward, the ability of the Central Bank of Nigeria (CBN) to control inflation in 2018 may be hampered by monetary injections by the government and politicians towards budgetary expenditure and election campaigns, respectively.