The World Bank expects slightly less than 2 per cent growth in the Nigerian economy this year, driven mainly by the non-oil industry and sector services, as the approach of the elections keeps foreign investors away.
Nigeria emerged from a recession last year, but growth remains fragile as the government borrowed domestic and foreign loans to finance its budget. It has raised nearly 9 billion USD in the Eurobond market since 2017 to boost growth.
“Nigeria’s emergence from recession remains sluggish, and sectoral growth patterns are unstable. In the second quarter of 2018, the oil sector contracted by 4.0 per cent,” the bank said in a statement.
GDP grew 0.83% last year, following a shrink of 1.58% in 2016, its first annual shrink in 25 years. The central bank of Nigeria’s forecast for this year is a growth of 1.75%.
The World Bank said that growth in the agricultural sector, which had held up well in the past, slowed to 1.2 per cent under the impact of security problems in the north.
The World Bank said non-oil industries and services, which account for more than half of Nigeria’s economy, were driven by growth in construction, transportation and communications technologies.
But it said investment in human capital, which the government was seeking to boost, remained low compared to other countries.
Nigeria is largely dependent on its oil sector for government revenues and foreign exchange, but it has been constrained by a subsidy on petrol and other deductions, the bank said, noting that foreign investment was stagnant.
It said higher oil exports had helped current account data in the first half but non-oil revenue had come in lower than expected despite reforms to improve the economy.
The World Bank expected the fiscal deficit to widen in 2018, with portfolio investors exercising caution ahead of the election, despite rising local yields.
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