The recovery of Africa’s biggest economy from last year’s coronavirus pandemic-induced contraction could be slower than previously expected.
Nigeria’s economy is likely to expand by 1.5% in 2021, JPMorgan Chase Bank NA analysts including Gbolahan Taiwo and Ayomide Mejabi said in an emailed note.
That’s after it shrunk 1.92% last year, the most since at least 1991, according to International Monetary Fund data.
That’s below the median estimate of 11 economists in a Bloomberg survey as well as the IMF and central bank’s predictions.
A “continued lack of foreign-exchange liquidity, underlying economic weakness, an emerging third wave of Covid-19 infections and a slow rollout of vaccines will likely slow the recovery process,” JPMorgan said.
Last week Naija247news recalled that the Nigeria estimates its economy will grow between 2.5% and 3% this year, Central Bank Governor Godwin Emefiele said on Tuesday, after an easing of lockdown and increased vaccinations boosted business, including international and local travel.
Africa’s largest economy had contracted in 2020 due to the coronavirus pandemic, though in the fourth quarter it managed to exit its recession, the second since 2016, and growth has now increased for three consecutive quarters to June 30.
The economy expanded by 5% in the second quarter of this year.
“With continued improvements in the economy, I am optimistic … we would end the year with an annual GDP growth of between 2.5–3.0 percent,” Emefiele told a banking conference.
Nigeria had been grappling with low growth before the COVID-19 pandemic triggered a recession and created large financing gaps, including dollar shortages and inflation.
Amid a third wave of infections, Nigeria has started a second phase of inoculating its 200 million citizens after it received a donation of 4 million doses of the Moderna vaccine from the U.S. government.
“Notwithstanding the positive news … I would admit that growth remains fragile. We are not out of the woods yet, given the challenges in combating the COVID-19 pandemic,” Emefiele said.
The World Bank said in June that Nigeria’s growth is lagging the rest of sub-Saharan Africa, with food inflation, heightened insecurity and stalled reforms slowing growth and increasing poverty. read more
The bank forecasted Nigerian growth at 1.9% in 2021 and 2.1% in 2022, compared with 3.4% this year and 4.0% next year for sub-Saharan Africa.
Emefiele said it will launch a 15 trillion naira ($36.50 billion) infrastructure fund, Infracorp Plc, in October to mobilise private capital for infrastructure investment.
President Muhammadu Buhari has made upgrading transport networks and investing to improve outdated power grids the pillar of his administration, with a view to boosting agriculture and other non-oil industries to cut dependence on dwindling crude revenues.
But funding has been a major constraint. read more
($1 = 411.0000 naira)
Additional reporting by Felix Onuah Editing by Gareth Jones