NIGERIA’S ECONOMY LIKELY TO GROW BY 1.5% IN 2021 – JP MORGAN
Global banking giant, JP Morgan disclosed that Nigeria’s economy is expected to grow less than analysts estimate, projecting Africa’s largest economy to only grow by 1.5% this year. This was disclosed by JPMorgan Chase Bank NA analysts including Gbolahan Taiwo and Ayomide Mejabi in an email reported by Bloomberg on Wednesday afternoon. The report stated JP Morgan said Nigeria’s economy is likely to expand by 1.5% in 2021.
They added that the “continued lack of foreign-exchange liquidity, underlying economic weakness, an emerging third wave of Covid-19 infections and a slow rollout of vaccines will likely slow the recovery process.”
JP Morgan’s estimates are lower than IMF’s forecast which Nairametrics reported in April. The International Monetary Fund lifted its global growth outlook to 6% in 2021 (0.5% point upgrade) and 4.4% in 2022 (0.2 percentage point upgrade), after an estimated historic contraction of -3.3% in 2020 due to the effects of the COVID-19 pandemic, citing that Nigeria is expected to grow by 2.5% in 2021 and 2.3% by 2022, while South Africa is projected to hit growths of 3.1% and 2.0% for the respective years in focus.
In July, the Federal Government forecasted that the Nigerian economy will grow by as much as 4.2% in 2022. This was disclosed by Mrs. Zainab Ahmed, Minister of Finance, Budget and National Planning, at the Public Consultation on the Draft 2022 to 2024 Medium Term Fiscal Framework and Fiscal Strategy Paper. “Inflation rate, which was planned for 11.95% in 2021, has been reflected in reality because the exchange rate is high. The average we have so far is 15%.
We are expecting 2022 to go down slightly to 13%, then 11% in 2023, and 10% in 2024. The exchange rate of the Naira to the dollar, which was N379 in the 2021 budget, has been adjusted to the NAFEX rate of N410.15 to one US Dollar. We are assuming, for now, the same rate for 2022, 2023, and 2024,” she said.
Meanwhile, Nigeria’s Gross Domestic Product (GDP) grew by 5.01% (year-on-year) in real terms in the second quarter of 2021, marking three consecutive quarters of growth following the negative growth rates recorded in the second and third quarters of 2020. Year to date, real GDP grew 2.70% in 2021 compared to -2.18% for the first half of 2020. Nevertheless, quarter on quarter, real GDP grew at -0.79% in Q2 2021 compared to Q1 2021, reflecting slightly slower economic activity than the preceding quarter due largely to seasonality.