Nigeria trims 2015 growth forecast amid uncertainty over oil and naira


This after the government trimmed expenditure because of the oil price slump, the statistics office said on Thursday.

The forecast follows the 60 per cent drop in the price of oil, Nigeria’s main export, since June and steady declines in crude production. Finance minister Ngozi Okonjo-Iweala had said in October she expected 2015 growth of around 6.75 per cent.

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Crude oil production in Africa’s top oil exporter fell steadily throughout 2014. It stood at 2.26 million barrels a day in the first quarter of last year and 2.15 million barrels per day by the third quarter, the National Bureau of Statistics (NBS) said.

In November Nigeria lowered its 2015 spending plan to 4.3 trillion naira, based on a benchmark oil price of 65 dollars a barrel, down from 77.5 dollars in the 2014 budget.

The NBS said it expected growth from 2015 through to 2017 to average 5.7 per cent, as reforms to the non-oil sector and investments in power and infrastructure help cushion the loss of revenues from weak oil prices.

“Outlook for the economy in 2015 and beyond is even more complicated, in light of declines in crude oil prices,” the NBS said.

“In addition to declining crude prices, the Nigerian economy is faced with other headwinds … the supply gap in the foreign exchange market is likely to increase as the demand for dollars outpaces supplies, putting pressure on the naira.”

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The central bank devalued the currency by eight per cent at the end of November to try to halt the decline in its foreign exchange reserves, hit by falling oil prices.

Despite the one-off devaluation, the naira has hit record lows against the dollar since this year. It closed at 189.10 to the dollar on Thursday.

Inflation is expected to rise this year to 8.78 per cent, up from an estimated 8.0 per cent last year, the statistics office said in its outlook for 2015, driven by the devaluation of the naira.

The NBS said it expected the devaluation to augur well for non-oil exports, adding that imports could slow as goods become more expensive.