Nigeria’s economy is likely to contract by 1.8 per cent this year, the International Monetary Fund (IMF) said yesterday, as the country grapples with the impact of low oil prices.
The sharp fall in global prices since 2014 has led to a prolonged economic crisis since the crude sales make up around 70 per cent of government revenue.
The IMF’s projection for this year, contained in its World Economic Outlook update, is down from the 2.3 per cent growth it foresaw in its April forecast. It now forecasts 1.1 per cent growth for 2017, down from 3.5 per cent in the April forecast.
Gross domestic product (GDP) contracted by 0.36 per cent in the first quarter of the year.
“In Nigeria, economic activity is now projected to contract in 2016, as the economy adjusts to foreign currency shortages as a result of lower oil receipts, low power generation, and weak investor confidence,” the IMF said.
The Central Bank of Nigeria (CBN) currency restrictions imposed last year in an attempt to protect dwindling foreign reserves prompted investors to flee and led to dollar shortages, pushing down the naira currency’s value on the country’s burgeoning black market.
