The global financial organisation, World Bank, has warned that Nigeria faces prospects of fragile economic recovery this year.
However, it noted that the country could build on its oil-driven economic recovery anticipated for it in 2017 by strengthening its macroeconomic policy framework and implementing the structural reforms needed to diversify the economy and break out of a boom and bust cycle.
This was contained in the World Bank’s newly-released Nigeria Bi-annual Economic Update.
Last year, the country witnessed its first full year of recession in 25 years. Global oil prices reached a 13-year low and oil production was crushed by vandalism and militant attacks in the Niger Delta, resulting in the severe contraction of oil GDP.
Although the oil sector represented only 8.4 per cent of GDP in 2016, lower foreign exchange earnings from oil exports had spillover effects on non-oil sectors (industry and services) dependent on imports of inputs and raw materials, and overall real GDP contracted by 1.5 per cent, the report noted.
While it made positive forecast for the country in 2017, largely due to recovery in the oil sector, the financial institution warned that such growth was fraught with fragility and risks.
“Given the risks associated with the oil sector, recovery is fraught with a high degree of fragility and risks; notably from future shocks to the oil price or further unrest in the Niger Delta, which is not yet fully stabilised, as well as from the incomplete implementation of new JV cash call arrangements,” it said.
However, the update highlighted that the Federal Government had recently launched an Economic Recovery and Growth Plan for 2017 to 2020 that contains reforms aimed at diversifying the economy to set it on a path toward sustained and inclusive growth over the medium- to long-term.
“The ERGP, if implemented successfully, would lead to expanded transportation infrastructure, increased reliability of power by restoring financial viability to the power sector, an improved business environment, improved educational attainment, strengthened public institutions, and improved transparency and anti-corruption,” the World Bank Country Director for Nigeria, Rachid Benmessaoud, said. – Punch.
