The African Development Bank, AfDB has projected that Nigeria’s Gross Domestic Product; GDP, would contract by between -4.4 percent and -7.2 percent in 2020, depending on the gravity and duration of the Coronavirus pandemic, COVID-19.
In its African Economic Outlook, 2020 – supplement launched yesterday, the bank stated: “Nigeria is facing rapidly weakening macroeconomic conditions, triggered by the sharp decline in the price of oil to below $30 a barrel in March 2020, from more than $60 at the start of the year. The pandemic has also had a cascading impact through reversed investment flows, volatile financial markets, and disruptions in travel and tourism. “Real GDP is projected to contract by between 4.4% and 7.2% depending on the gravity and duration of the pandemic, wiping out gains from the three consecutive years of growth since the 2016 recession.”
The report noted that crude oil and gas account for an estimated 90 percent of the country’s total export earnings and more than 50 percent of her fiscal revenues.
The report added: “The government projects oil revenues to decline by 90% in 2020 due to the decline in oil price triggered by low demand. Coupled with growing expenditure pressures to mitigate the COVID–19 health and socioeconomic impacts, the budget deficit is projected to widen to 6.7% in the baseline scenario, with the potential to deteriorate to 7.8% if the pandemic persists beyond the second half of 2020.
“Lower oil exports will deepen the current account deficit to between 4% of GDP in the baseline scenario and 5% in a worst-case scenario, wiping out the pre-COVID–19 projected marginal surplus.
“Despite the likely improvement in farm produce as wet season starts, subdued consumer demand and lower than expected growth in bank credit, inflation is forecast to increase to 14% in 2020 from the 11.1% projected before the crisis.
“The COVID–19 pandemic has morphed into a socio-economic crisis with far-reaching implications on jobs and poverty.
Meanwhile, Director of the Macroeconomic Policy, Forecasting and Research Department, African Development Bank, Dr. Hanan Morsy, noted in the presentation of the Economic outlook that, “under the baseline scenario, real GDP in Africa is projected to contract by 1.7 percent in 2020. In the worst scenario, GDP could fall by -3.4 percent in 2020.”