According to the World Bank, economic growth is expected to expand by 1.1% this year while Bloomberg forecasts GDP to contract by 1.5% in Q1 2021.
Africa’s largest economy has displayed resilience over the past few months.
From defending against the Covid-19 menace to battling untamed inflation and shouldering domestic risks.
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Initially, the economic outlook was bleak during 2020 after the economy sunk back into its second recession in less than five years.
Lockdown restrictions caused significant disruptions in the value chain, halted most aspects of the economy while crippling the manufacturing sector.
A growing sense of alarm and unease over surging coronavirus cases added to the uncertainty, ultimately fanning fears around Nigeria experiencing a prolonged economic recession.
However, the economic expansion of 0.11% in Q4 2020 came as a breath of fresh air and offered some light at the end of the tunnel.
Although the economy contracted 1.92% for the full year, the rebound during the final quarter raised hopes that Africa’s largest economy was exiting from the Covid-19 induced recession.
According to the World Bank, economic growth is expected to expand by 1.1% this year while Bloomberg forecasts GDP to contract by 1.5% in Q1 2021.
Nigeria certainly has the potential to exceed these growth estimates due to rising oil prices and improving global economic conditions.
It must be kept in mind that earnings from oil exports account for over half of government revenues and about 90% of foreign-exchange earnings.
As oil prices appreciate, this provides the government with ammunition to attack domestic risks threatening the country’s fragile economic outlook.
In regards to other key metrics, inflation is seen averaging around 14% while the Central Bank of Nigeria (CBN) is forecast to hike interest rates at least once this year as economic conditions improve.
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