The economy of Nigeria, Africa’s largest oil producer, will probably expand 6.8 percent this year, the National Bureau of Statistics said.
The outlook compares with an estimated growth rate of 6.6 percent in 2012, the statistics bureau said, and a 6.5 percent target in the budget presented by President Goodluck Jonathan to Parliament in October. The economy expanded 7 percent in the fourth quarter, compared with 6.5 percent in the previous one, the statistics office said, citing provisional estimates.
In the past year, the “non-oil sector was affected by the incidence of flooding, as well as muted consumer demand for the most part of the year” in industries including wholesale and retail and telecommunications, the bureau said in e-mailed statement. “Infrastructure challenges still hampered manufacturing.”
While the growth forecast for this year “is modestly below the multi-year trend recorded in Nigeria,” the 6.8 percent forecast “would still be robust” compared with other African and emerging-market countries and with global standards, Samir Gadio, a London-based emerging-markets strategist at Standard Bank Plc, wrote in an e-mailed reply to questions today.
“What really matters is the pace of structural reforms that would allow Nigeria to unlock her investment and economic potential,” he said. “Clearly the key challenge is to achieve a growth model that ensures structural transformation and makes the elevated growth rates more relevant for the Nigerian population.”
Inflation is forecast to average 9.8 percent this year, the statistics office said. The rate fell to 9 percent in January from 12 percent in the previous month. It is forecast to drop to 9.5 percent next year, 9.8 percent in 2015 and 10 percent in 2016, the agency said.
“These trends are premised on the assumptions that the monetary authorities will continue to pursue, as in 2012, managed tightening of monetary policies and stable fuel prices,” the statistics office said. Jonathan cut a subsidy on gasoline in January last year, boosting prices in Africa’s most populous country.
The Monetary Policy Committee, led by Governor Lamido Sanusi, kept its policy rate unchanged at a record 12 percent for an eighth consecutive meeting on Jan. 21 after raising it by 575 basis points in 2011 to curb price pressures and support the naira. The bank will hold off on cutting borrowing costs while it monitors government spending and until policy makers see that “lowering rates will not in any way undermine the tremendous achievements we’ve had,” Sanusi said on Jan. 25.
The economy is forecast to grow 7.3 percent in 2014, 6.9 percent in 2015 and 6.6 percent in 2016, the statistics bureau said. Economic growth will probably slow down after Nigeria updates its GDP base year, Alan Cameron, an economist at CSL Stockbrokers Ltd. in London, said today in an e-mailed response to questions.
Nigeria is updating its GDP base year to 2010 to give a better indication of the size of the economy. The West African country’s GDP is now based on spending patterns from 1990. The updated data, which are now set to be released Oct. 24, will probably boost the size of the Nigerian economy while lowering economic growth figures, according to the statistics bureau.
The agency has postponed the release of the data at least twice before. “If it goes ahead, we would expect to see a lower real GDP growth figure, something in the region of about 6 percent,” Cameron said. The effects will probably be reflected from the first quarter next year, he said.
Imports fell by 49 percent in the third quarter last year, compared with the same period in 2011, amounting to 4.3 billion naira ($27.3 million). Exports rose in the second and third quarters of 2012 after a decline in the first quarter, with total merchandise trade value rising 0.4 percent to 20.9 billion naira by the third quarter, compared with the same period a year earlier, the statistics bureau said.
“The recent declines in imports are expected to carry on till the third quarter of 2013,” the agency said. “In this view, there is less likely to be pressure on Nigerian foreign reserves as there will be decreasing demand for foreign exchange to settle high import bills.”
Nigeria’s foreign-currency reserves have advanced 33 percent $46.7 billion, compared with a year earlier, according to Feb. 14 data compiled by the central bank.