The oil price outlook, security risks, monetary policies of US Federal Reserve System and Nigeria’s policy response to shocks have been identified as major drivers of investor sentiment in Nigeria.
This was the view of Razia Khan, head of research and chief economist, Africa, Standard Chartered Bank in her recent presentation in Lagos titled ‘How key global risks could impact Nigeria’.
Though she insisted that Nigeria’s rebased GDP of $545bn against that of South Africa at $354.15bn reveals Nigeria has a more diversified economy, “but fiscal and external vulnerabilities remain.” She insisted that ‘rebasing’ confirmed that Nigeria was the largest economy in Africa.
As a country whose revenue base is largely dependent on oil, the analysts questioned whether Nigerian growth could be sustained, given lower oil prices. “Oil price is key to cross-border lending. Oil is a key driver of perceived creditworthiness.”
Nigeria’s real GDP growth year-on-year (y/y) was 6.2 percent in 2014; a forecast of 4.5 percent in 2015; and 5.5 percent GDP growth forecast in 2016.
Oil rose towards $66 a barrel on Thursday, gaining for a second day, supported by expectations that a global supply glut is starting to ease and by fighting in Iraq.
Brent crude was up 80 cents at $65.83 as of 0937 GMT, after earlier falling as low as $64.83. U.S. crude was up 69 cents at $59.67. Nigeria’s long-term development challenges remain.”
“Declining oil production remains a concern. Nigeria remains overly reliant on resource taxes; needs to accelerate non-oil revenue mobilisation. Driving higher revenue mobilisation will not be easy,” Khan added.
Source : BusinessDay