Nigeria’s economy likely to shrink 1.3% in 2016 – NBS

*Nigerian enterprises.

*Nigerian enterprises.

Oscarline Onwuemenyi

07 October 2016, Sweetcrude, Abuja – The National Bureau of Statistics (NBS) has said Nigeria’s economy is likely to shrink by 1.3 percent in 2016 due to the sharp fall in the naira after dollar peg was dropped in June.

The NBS had predicted a growth of 3.8 percent in 2016 but low oil prices had thwarted the prediction with a contraction of 2.1 percent in the second quarter.

The International Monetary Fund (IMF) already predicted in July that Nigeria’s economy would contract 1.8 percent this year.

The NBS had also revised its inflation forecasts, NBS Chief Executive, Mr. Yemi Kale said. He added that year-end inflation was estimated at between 17.1 percent and 18 percent, up from 9 percent at the start of the year.

“All things remaining constant, year-end GDP should be around -1.3 percent from our internal model,” he told Reuters.

Oil sales, which generate 90 percent of foreign exchange for the economy, contributed around 10 percent of Nigeria’s GDP directly and around 52 percent indirectly through its links with other sectors, Kale said.

Kale said that a sharp downward revision of its estimates was prompted by sharp falls in the naira after dollar peg was dropped.

The NBS had predicted the Nigerian economy to grow 3.8 percent in 2016, but low oil prices have hammered the country’s income and the naira, and recession first appeared in the second quarter with 2.1 percent contraction.

A contraction in 2016 would mark Nigeria’s first year of recession in 25 years. Kale said the economy was likely to shrink in the third quarter.

The IMF had on Tuesday predicted that Nigeria’s economy would contract 1.7 percent this year.

The NBS had also revised its inflation forecasts, Kale said. Year-end inflation was estimated at between 17.1 percent and 18 percent, he said, up from 9 percent at the start of the year.

“All things remaining constant, year-end GDP should be around -1.3 percent from our internal model,” he stated.

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