Nigerian GDP growth disappointed in Q2 (+2% y/y), again…experiencing its 17th quarter below population growth. Such a long goodbye means that Nigeria never really recovered after the oil price shock that interrupted suddenly its growth cycle in 2015, despite a partial rebound of the oil price (59 USD/bbl currently) from the 2016 trough (30 USD/bbl). This low performance also means that the relaxation of credit controls in Q2 did not provide the credit stimulus intended to the economy and that monetary policy may be eased further. However, the transmission of this easing to activity should remain limited. The underdevelopment of the agricultural sector is among the main weaknesses, and the recurrent conflicts between herders and farmers show how deep the missed potential is, implying that Nigeria should continue to import food. Among other weaknesses, Nigeria continues to export crude oil that is refined elsewhere. Moreover, the infrastructure boost that is needed along with urbanization is not materializing. As a result, growth is expected to remain capped (+2% in 2019 and +1.5% in 2020).
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Weekly Export Risk Outlook 4 September 2019