Country Economic Forecasts > Nigeria

Following GDP growth now estimated at 3.2% in 2015 (down from 6.3% in 2014), we still forecast a modest pick-up in the coming years, to 3.8% in 2016 and then just under 5% a year in 2017-18. But high-frequency indicators hint at another poor growth print in Q4. The manufacturing PMI moved into expansionary territory in November but is still hovering close to the 50 level, suggesting very sluggish growth. Meanwhile, the non-manufacturing PMI fell to its lowest level since March. Inflationary pressures eased in Q3 as the effects of NGN devaluation earlier in 2015 started to dissipate. But after falling to 9.3% in October, headline inflation rose to 9.4% in November as renewed fuel shortages resulted in average domestic fuel prices rising 23% to NGN115.4 a litre. Higher fuel prices will add upward pressure to inflation in the coming months as second-round effects feed into other prices. The CBN's less restrictive monetary policy stance (the key policy interest rate was cut by 2% points to 11% in November) and excess liquidity in the financial system will also add to upward pressure on prices. We forecast inflation will rise to an average of 10.1% in 2016 from 9% in 2015.The slump in oil prices since mid-201 has led to a sharp deterioration on the balance of payments. A plunge in exports of nearly 40% in 2015, after a 13% drop in 2014, saw the current account move into a deficit of about 3% of GDP from a small surplus in 2014. A similar deficit is forecast for 2016.