Nigeria’s economic growth to decelerate to 3.2% in 2022 -AfDB

Nigeria’s economic growth will decelerate, averaging 3.2% during 2022–23, due to persistent low oil production and rising insecurity, the African Development Bank has revealed in its 2022 Economic Outlook Report.

Inflation is also projected to remain elevated at 16.9% in 2022 and to stay above pre-pandemic levels in 2023, fueled mainly by rising food, diesel, and gas prices and persistent supply disruptions amplified by the Russia–Ukraine conflict.

Capital inflows are projected to recover, while oil exports are projected to increase slightly.

“The benefit of  a  forecast  positive  oil  price  shock  on exports may, however, be partly offset by a weak output effect due to lower oil production, stoked by infrastructure  deficiencies  and  rising  insecurity”, it stressed.

The  projected  marginal  current  account  surplus  of  0.1%  of  GDP  in  2022 could however turn into deficit of 0.2% in 2023.

Improved revenue collection will help narrow the fiscal deficit to an average of 4.5% of GDP. Public debt targeted to reach 40% of GDP by 2024 on fresh borrowing.

The headwinds to the outlook may be exacerbated by rising insecurity and policy uncertainty underpinned by reversal of initially planned removal of subsidies on premium motor spirit a year before the 2023 elections.

Nigeria’s economy grew by 3.6% in 2021 from a 1.8% contraction in 2020, underpinned on the supply side by 4.4% expansion in the non-oil sector against 8.3% contraction in the oil sector; non-oil growth was driven by agriculture (2.1%) and services (5.6%).

On the demand side, public and private consumption were contributors to GDP growth. Per capita income grew by 1.0% in 2021.

The fiscal deficit narrowed to 4.8% of GDP in 2021 from 5.4% in 2020, due to a modest uptick in revenues, and was financed by borrowing.

Public debt stood at $95.8billion in 2021, or about 22.5% of GDP.