Country Economic Forecasts > Nigeria

The Nigerian economy performed dismally in Q1-Q3 this year, and high-frequency indicators suggest that Q4 will not be much better. Apart from positive base effects, the performance of the economy in 2017 will ultimately depend on government policy decisions and the effectiveness of policy implementation. The recent announcement that the 2017 budget will be presented to parliament this month lowers the risk of a repeat of the severe delays experienced in 2016, and a larger proportion of envisaged expenditure being dedicated to capital projects is also a positive sign. While recent signals point to the opposite, our baseline still sees the CBN loosening its grip on the NGN once price pressures start to dissipate next year. A more liberal stance on the currency should attract increased FDI and portfolio inflows, while external lenders will also be more willing to fund the fiscal shortfall. We also expect the frequency of sabotage attacks in the Niger Delta to decline slightly next year due to increased policing and more regular engagement between militants and the government. We now see GDP falling by 1.8% in 2016, compared with a previous forecast of a 1.6% contraction. Growth should recover to 1.5% in 2017 and then around 3% a year in 2018-19.