Nigeria Economic Outlook
May 2020
The economic scenario has drastically deteriorated amid the twin shocks of the Covid-19 pandemic and global oil price crash. The lockdown measures imposed in the countryies major economic centers will only amplify the blow as the services sector reels from the severe pullback in consumption. On the heels of the around NGN 3.5 trillion (around USD 9.7 billion) announced by the Central Bank in mid-March, the lower chamber of the legislature approved a stimulus bill later that month to help households and businesses cope with the fallout. The government is also set to secure funding worth USD 9.6 billion from multilateral lenders.
Meanwhile, the sharply deteriorated outlook prompted both S&P Global Ratings and Fitch Ratings to cut Nigeria’s credit rating further into junk territory recently. Moody´s, however, held off from a downgrade and retained the countries rating at B2 on 15 April, citing its low debt burden offsetting the risks from the twin shocks.
Nigeria Economic Growth
After only gradually recovering from the 2016 recession, the economy is set to contract again this year. The collapse in crude prices may hinder domestic production, battering FX and fiscal revenues and adding pressure to the country’s international reserves and the currency in turn.
The coronavirus-induced disruption to activity further darkens the outlook. FocusEconomics panelists see GDP contracting 2.0% in 2020, which is down 3.1 percentage points from last month’s estimate, and growing 1.9% in 2021.