Fitch Solutions, an arm of the international rating agency, Fitch Ratings says it expects the Nigerian Gross Domestic Product (GDP) to grow by 2.1 per cent by the end of 2021 an upward review from 1.8 per cent which it previously projected for the country.
Nigeria’s real GDP grew by 4.03 per cent in the third quarter of the year according to latest data by the National Bureau of Statistics, indicating an average growth rate of 3.28 per cent year to date. The growth had been largely driven by growth in the non-oil sector of the economy, which grew by 5.44 per cent while the oil sector contracted by 10.73 per cent year-on-year, due to the decline in crude oil production.
Fitch Solutions in the Nigeria Country Risk report, said “we at Fitch Solutions expect Nigerian real GDP to grow by 2.1 per cent in 2021 after it contracted by an estimated 1.9 per cent in 2020. Data published by the National Bureau of Statistics indicate that real GDP growth accelerated for a third consecutive quarter to 5.0 per cent in Q2 2021, from 0.5 per cent in Q1 2021.
“However, the Q221 data point to a modest economic recovery, considering that real GDP contracted by a substantial 6.1 per cent in Q220 (in quarter-on-quarter terms real GDP contracted by 0.8% in Q221, indicating that the economy remains in a fragile state). Nevertheless, the Q221 outturn was moderately higher than we had anticipated. Reflecting this, we have adjusted up our real GDP growth forecast for 2021 from 1.8 per cent.”
They noted that they expect some lockdown restrictions to remain in place in the coming months, given Nigeria’s low vaccination rate (at the time of writing, just 2.4% of Nigeria’s population had received at least one dose).
“These measures will prevent stronger rebounds in private consumption and fixed investment, which we believe will add 1.2 percentage points (pp) and 0.3pp to headline growth respectively. Weak production of oil (88.7 per cent of exports in 2020), which our Oil & Gas team expects to fall by 1.8% in 2021 due to OPEC+ restrictions and limited investment in production capacity, will see net exports subtract 2.4pp from growth,” they added.