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Consensus Around 1% Growth Projection for Nigeria's Economy in 2017

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Wednesday, January 18, 2017 03.30 PM / Proshare WebTV

Nigeria Africa’s largest economy is currently experiencing its worst recession in many years, with an unprecedented inflation rate(18.55%), tight monetary policy rate (14%), high unemployment (13.9%)  and  a challenging foreign exchange market. 

The government in response to this has rolled out in 2017 a 10-point fiscal plan and proposed a national budget of N7.3trl, with 30% allocated to capital expenditure. 

Interestingly  global financial institutions, analysts and  research firms agree in their projections that Nigeria will recover from the recession going by their 2017 forecast for growth. 

That  brings a lot of optimism for an economy which has been at its dire straits,since 2015 and is definitely worth observing and assessing as the year unfolds. 

World Bank projects 1% growth

The World Bank in its projection, says Nigeria will  recover from the recession with a GDP growth forecast of 1%, while Sub-Saharan Africa is expected to experience a modest 2.9% growth in 2017. For the global economy the World Bank projected a moderate growth of 2.7% 

IMF forecast of 0.8% 

On its part the International Monetary Fund (IMF) is also optimistic that Nigeria will scale through the recession, with a forecast of 0.8% GDP growth, while it believed Sub-Saharan Africa will grow at 2.8%. At the global level the IMF predicted a 3.1% growth level  

Fitch says 2.6% 

Notable international financial rating agency Fitch is also confident from its analysis, that Nigeria’s economy will experience a rebound from the recession, with a GDP growth projected at 2.6%.  

NSE sees 0.6% 

The Nigeria stock exchange in its 2017 outlook for the Nigerian economy stated that the GDP will experience a modest growth of about 0.6%, with all the key factors aligning from the fiscal monetary policy framework.  

Financial Derivatives sets 1.2% 

One of Nigeria’s leading economic research and advisory firms Financial Derivatives, in its analysis projects that the economy will achieve a 1.7% growth in 2017 coming out of the recession.  

Vetiva pegs 1.8% 

Vetiva a Pan-African financial services company involved in research/analysis looking at the 2017 Nigerian economic outlook predicts that GDP growth will hit 1.8%.  

With the various projections we see the possibility of a growth rate ranging from 0.6% to 2.6%, which should be good news for Nigeria amidst the economic downturn, but in its recent publication “2017: A Year of Fear laced with Hope”, Financial Derivatives outlined three conditions to attain recovery; 

a)     Engagement in the Niger Delta to bring production back up to 2mbpd

 

b)     Reduction in interest rates and an increased supplementary budget

 

c)      An overhaul of the forex market to ensure transparency, liquidity and price efficiency.
 

In addition at the global level, it is expected that the international crude oil will price, will remain above the Nigerian budget benchmark of $42.5, analysts believe if it stays at the $55 per barrel, it will be a positive outcome for the country.

 

The various projections brings hope to Nigerians who are grappling  with the recession, but a major task will be the proper alignment of Nigeria’s fiscal, monetary and trade policies tailored towards growth.   

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