The National Bureau of Statistics on Wednesday predicted a sharp drop of 1.3 per cent in Nigeria’s economy for 2016.
Head of the NBS, Yemi Kale said this was prompted by sharp falls in the naira after dollar peg was dropped, adding that it had predicted the Nigerian economy to grow 3.8 per cent in 2016, but low oil prices have hammered the OPEC member’s government income and the naira.
He noted that recession first appeared in the second quarter with 2.1 per cent contraction. “A contraction in 2016 would mark Nigeria’s first year of recession in 25 years,” said Kale.
Relatively, the International Monetary Fund already predicted in July that Nigeria’s economy would contract 1.8 per cent this year.
The NBS had also revised its inflation forecasts, Kale said. Year-end inflation was estimated at between 17.1 per cent and 18 per cent, up from 9 per cent at the start of the year.
“All things remaining constant, year-end GDP should be around 1.3 per cent from our internal model,” he told newsmen.
Prior to ditching the currency peg in June, Nigeria had fixed its exchange rate at 197 to the dollar.
Kale said the new projection factored in the currency float.
The naira has hit record lows on the black market in the last month, weakening to as low as 485 per dollar. It has held firm at around 305 on the official market, supported by central bank interventions.
Nigeria’s economic growth started to slow by the second quarter of 2014 after an oil price collapse hurt government revenues and caused severe dollar shortages on the currency market.
Oil sales, which generate 90 percent of foreign exchange for the economy, contributed around 10 percent of Nigeria’s GDP directly and around 52 percent indirectly through its links with other sectors, Kale said.
A record 2016 budget of 6.06 trillion naira aimed at tackling the recession was based on generating non-oil receipts largely from widening the tax net and raising debt at home and abroad to augment spending. So far the government has spent 720.5 billion naira on capital spending.
But Nigeria has yet to raise funds abroad and revenue problems have been exacerbated by militant attacks on energy facilities, which have cut crude production by a third.
The debt office launched a roadshow to Britain and the United States to promote a planned Eurobond issue while the African Development Bank will this month consider a $1 billion loan to Nigeria to help cover its budget deficit.
