NIGERIA IS a middle
income, mixed economy
and emerging market,
with expanding financial,
service, communications,
and technology and
entertainment sectors. It is
ranked as the 21st largest
economy in the world in
terms of nominal Gross
Domestic Product, GDP, and
the 20th largest in terms of
Purchasing Power Parity.
It is the largest economy
in Africa; its re-emergent,
though currently
u n d e r p e r f o r m i n g ,
manufacturing sector is
the third-largest on the
continent, and produces
a large proportion of
goods and services for
the West sub region.
Nigeria recently changed
its economic analysis to
account for rapidly growing
contributors to its GDP,
such as telecommunications,
banking, and its film
industry.
The present economic
situation in the country
has predicted doom for
the nation as projected by
many economists and even
the International Monetary
Fund, IMF.
The National Bureau of
Statistics, NBS, has outlined
its own position on all key
economic indicators, not
just for 2016 but also in the
next four years to 2019.
The projections covers the
annual growth rate of real
Gross Domestic Products,
GDP, annual Inflation rate,
and the annual growth
rate of the Value of Total
Trade, VTT. Gross Domestic
Product, GDP
In a report released recently
by NBS said “growth in 2016
is expected to be tepid at
best”. Economic tepidity is
one characterised by dull
activities in key market
segments and performance
areas. NBS’ prediction was
based on the happenings
in the economy recently
especially in 2015 marked by
huge negative impact of its
dependency on oil revenue
amidst price shocks.
It noted “years prior to
2015, the Nigerian economy
was largely supported by
the non-oil sector as supply
disruptions hampered oil
output. In 2015 however,
various factors including
political uncertainty prior
to and six months after the
elections, and intermittent
supply shocks of refined
petroleum products, and
others weighted on both oil
and non-oil output.
The entire economy took
a hit”. Consequently GDP
which is the key indicator of
economic health of a country
was on the downside,
declining in the first and
second quarter with marginal
recovery in the third quarter
2015. However, NBS stated
that “in 2016, the economy is
expected to grow by 3.78 per
cent, as output in the oil and
non-oil sectors are expected
to perform marginally better
relative to 2015”.
According to the Bureau,
Federal Government’s main
economic research agency,
“the declines in prices of
crude oil and related refined
products give the Nigerian
government the opportunity
for some potential savings as
subsidies payments on PMS
and other refined products
may be diverted into more
productive aspects of the
economy”. It noted that “the
government has taken a step
further to repeal subsidies
on kerosene products.
As it stands there are
no subsidies on PMS and
this should bode well for
government coffers going
forward. “In the near term,
support to the non-oil sector
is expected to come through
initiatives by the Central
Bank of Nigeria, CBN, and
the Government at Federal
and State levels. “One of such
initiatives is the N300 billion
Naira export stimulation
fund by the CBN.
Increased efforts by State
governments to boost
internally-generated revenue,
when combined with more
prudent and targeted
infrastructure spending,
are likely to lead to better
output performance”. Going
forward NBS said the 2017
to 2019 period is expected
to reap the benefits of the
extra N1.6 trillion into
capital expenditures in the
2016 budget, adding that
in particular, plans by the
government authorities
to increase power supply
by developing critical
infrastructure to transport
gas to the power plants in
order to add 2,000 mega
watts to the country’s stock
of power within the next
12 to 15 months will have
multiplier effects on both the
manufacturing and services
sectors.
NBS stated “other measures
expected to spur growth
include fiscal measures such
as the implementation of the
Treasury Single Account,
TSA, improvements in tax
collection efforts and the
creation of an Efficiency Unit
in the Federal Ministry of
Finance to ensure that scarce
resources are adequately
deployed. With hopes on
the salutary effects of these
measures NBS said over the
2017 to 2019 period, growth
is expected to average
5.42 per cent. Inflationary
Pressures Another key
economic variable examined
and projected by NBS is the
inflation rate.
In this report NBS has
projected that inflation may
rise to 10.16 by end of 2016.
But it also indicated a gradual
decline such that over the
2017 to 2019 period, inflation
is expected to average 9.01
per cent. NBS’s outlook for
the previous year predicted
that curbing inflation would
be harder to achieve as a
result of the devaluation of
the Naira, which occurred in
November 2014. Indeed the
first half of the year recorded
more macroeconomic
volatility as the headline
rate, year-on-year, recorded
a wider range relative to the
second half of the year.
In the Second half of the
year speculative pressure
on the Naira compounded
supply shocks exhibited
in the first half of the year.
Though administrative
measures by the CBN helped
curb some inflationary
pressure, according to NBS,
speculative pressure on the
Naira is likely to exist in 2016
in light of the current state of
foreign reserves.
The Bureau noted, ‘’while
administrative measures
will help provide some
cover, the downside risk
of such measures is that by
making imported goods
more difficult to obtain,
they increase the price of
such goods, leading to
higher inflation. “We expect
that the Central Bank’s
adjustment of the foreign
exchange management
framework will be steady in
the year and will thus mean
a gradual easing in prices
beyond 2016”. Value of Total
Trade 2015 saw a decline in
both the values of imports
and exports. Exports were
weighed upon by the decline
in the price of crude, while
overall sluggish growth as
well as foreign exchange
restrictions weighted on the
value of imports.
NBS stated that “going
forward the relative lower
price of the Naira is expected
to result in cheaper prices of
non-oil exports, and again
curb increases in imports.
“Nevertheless, Value of Total
Trade is forecast to increase
on the margin, increasing
by 2.41 per cent as Imports
increase by 2.88 per cent
and exports increase by 2.16
per cent. “Beyond 2016, a
stabilization in oil prices
while not expected to reach
2014 levels in the medium
term in combination with a
more competitive economy is
expected to yield a rebound
in both imports and exports.
“Total Trade is projected to
increase by 2.41 per cent in
2016, and grow by an average
15.62 per cent yearly over the
forecast period 2017 to 2019”.


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