The World Bank Group has warned that the Nigerian economy faces its worst recession in 40 years, owing to the collapse of crude oil prices and the effects of the COVID-19 pandemic.
The Bank said this in a new report, titled, “Nigeria in times of COVID-19: Laying foundations for a strong recovery.”
The report projected that Nigeria’s economy would likely contract by 3.2 per cent by the end of this year.
In its report, the World Bank said the collapse in crude oil prices, coupled with the Covid-19 pandemic, was expected to plunge the Nigerian economy into a severe recession, the worst since the 1980s.
The report stated, “This projection assumes that the spread of COVID-19 in Nigeria is contained by the third quarter of 2020.
“Before COVID-19, the Nigerian economy was expected to grow by 2.1 per cent in 2020, which means that the pandemic has led to a reduction in growth by more than five percentage points.”
It added, “The macroeconomic impact of the COVID-19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus.
“Oil represents more than 80 per cent of Nigeria’s exports, 30 per cent of its banking-sector credit, and 50 per cent of the overall government revenue.”
The report said if the spread of the virus became more severe, the economy could contract further.
It said with the drop in crude oil prices, government’s revenues were expected to fall, from eight per cent of Gross Domestic Product in 2019, to a projected five per cent in 2020.
The Country Director for Nigeria, World Bank, Shubham Chaudhuri, said that while the long-term economic impact of the global pandemic was uncertain, the effectiveness of the government’s response was important to determine the speed, quality, and sustainability of Nigeria’s economic recovery.
He said it had become even more urgent to address bottlenecks that hindered the productivity of the economy and job creation as the country battles the impact of the Coronavirus pandemic.