Country Economic Forecasts > Nigeria

High-frequency indicators remain firmly stuck in contraction territory, which together with the economy's dismal performance in H1 2016, support our view that the economy will shrink this year. While security threats have eased slightly as negotiations with militants look set to get underway, preliminary statistics reflect that oil output remained near multi-year lows in September. This, and signs that the ramp-up in fiscal expenditure is progressing more slowly than expected, have prompted a revision in our growth forecast. We now see real GDP contracting by 1.4% in 2016.We now also project a slower rebound in GDP growth moving forward. The central bank is maintaining a tight grip on the currency, with banks reportedly receiving detailed instructions on how to disburse scarce forex supplies. Regardless of this, a significant amount of pent-up structural import demand will see tight forex liquidity conditions persist over the short term, and possibly even beyond 2017. Scarcity of US dollars will thus continue to have an adverse impact on economic activity. GDP growth is now forecast to rebound to only 2.1% a year in 2017-18 (down from 2.6% pa last month).