Statistics office expects Nigerian economy to grow by 3.78%

Nigeria economy to grow by 3.78 percent in 2016 as Africa's top oil producer has been hit hard by a slump in oil price

Photo by: Reuters
Photo by: Reuters

A view of the central business district is seen from a roof-top in Lagos, Nigeria.

Nigeria's economy, reeling from the drop in oil prices, is expected to grow by 3.78 percent this year, up from 2.97 percent in 2015, as it tries to confront its worst crisis in decades, the national bureau of statistics said on Thursday.

The statistics office expected growth to reach an average of 5.41 percent yearly between 2017 and 2019 as infrastructure development provide support for both the oil and non-oil sectors, it said.

"Output in the oil and non-oil sectors are expected to perform marginally better relative to 2015," the bureau said in a report, explaining its forecast.

Africa's top oil producer has been hit hard by a slump in oil prices, which has eroded public finances and weakened its currency.

The naira currency has weakened 35 percent below its official level on the black market, weighed down by sinking oil prices and speculation that Africa's biggest economy will have to formally devalue.

President Muhammadu Buhari is against devaluation, backing the central bank's stance of keeping rates unchanged in the face of sharp falls against the dollar on the black market.

"Speculative pressure on the naira is likely to exist in 2016 in light of the current state of foreign reserves and inflation may rise to 10.16 by year end," the report said.

Last week, Nigeria's foreign reserves fell to $28.2 billion, their lowest level since 2005.

The statistics office expects the central bank's adjustment of the foreign exchange management framework to be steadied this year thus helping prices to gradually ease beyond 2016. Over the 2017 to 2019 period inflation is expected to average 9.01 percent, it said.

The outlook hit investments. Last year foreign inflows fell to $9.64 billion, down 53.5 percent from $20.75 billion in 2014. The bureau expected the Nigerian economy to benefit from central bank stimulus worth 300 billion naira.

TRTWorld, Reuters