Nigeria’s economy may slip into recessionary territory this year following reduced economic activity during the lockdown ,according to Experts at Cordros Capital.
The Experts led by Jolomi Odonghanro said this grim ”expectation is further compounded by the drop in crude oil prices, which is expected to weigh markedly on public finances. Thus, for 2020, we have revised our real GDP growth estimate to -1.12%, partly supported by the positive surprise outturn in Q1-20. Our forecast is hinged on the expectation for contraction across both the oil and nonoil sectors”.
As they postulated Nigeria’s commitment on complying with the new OPEC oil production cut agreement was central in forecasting our expectation for oil GDP over 2020,adding” We understand that Nigeria’s production quota, based on the new OPEC pact, is set at 1.40mb/d. When condensates are accounted for, we now expect actual oil production to average 1.70 mb/d (-11.2% y/y).
” During the last OPEC assessment in June, Nigeria was identified among the notable stragglers, including Iraq and Kazakhstan. With the OPEC implementing some form of compliance improvement mechanism, it is unlikely that Nigeria will continue to get away with its recalcitrance. Thus, we assume 100% compliance by Nigeria. Against the blend of high base from the corresponding period in the prior year and our expectation for full compliance by Nigeria, we now expect oil GDP growth to contract by -11.0% y/y over 2020E”it stated.
However,they disclosed that following the initial policy responses by the Central Bank of Nigeria(CBN) to limit the impact of COVID-19 on the economy,they expect that the agriculture sector will remain positive .
Hinting that the injection of NGN1.5 trillion into the real sector, with loans to MSMEs, and moratoriums on existing CBN interventions such as the “Commodity Development Initiative” should keep the agriculture sector afloat over 2020.
Maintaining that most of the growth in the sector is expected to be supported by increased output from crop production, livestock, and fishing subsector;saying ”having also factored in the domino effects of the COVID-19 pandemic and pre-existing risk elements such as the herder/farmers’ conflicts and banditry, we project an average growth of 1.5% y/y in 2020”.