Nigeria’s Economy to Further Face Downside Risk—Fitch
By Dipo Olowookere
Global rating company, Fitch, has disclosed that top economies in the sub-Saharan region, which include Nigeria, face significant constraints due to poor economic environments and political obstacles.
In its African Monitor report obtained by Business Post, the rating agency said “reform momentum has stalled in Nigeria, largely owing to political constraints which we expect to remain elevated leading up to and after the February 2019 presidential race.”
Commenting on the nation’s economy, Fitch said, “Although growth increased in Q318 compared with the previous quarter, Nigeria’s economic recovery remains tepid and will continue to face downside risks over the short term.”
In the third quarter of 2018, Nigeria’s real GDP grew by 1.8 percent year-on-year, up from 1.5 percent in the second quarter of last year and 1.4 percent in the third quarter of 2017.
Annual economic growth was again led by the non-oil sector while oil production, although higher than in the previous quarter, saw a year-on-year contraction in Q318.
Fitch noted that growth of 1.8 percent in Q318 was well below the average annual growth of 4.8 percent between 2011 and 2015, weighed down by weakness in the crucial oil sector.
On the rising unemployment rate in the country, the company emphasised that this will continue to weigh on economic growth in 2019.
“High unemployment limiting consumer spending reinforces our expectations for weaker economic growth over the coming quarters.
“The NBS’s figures also show that the youth population, aged between 15 and 34 and comprising 48.9 percent of the workforce, continues to struggle in the labour market.
“With youth unemployment having risen to 29.7 percent in Q317, from 10.9 percent in Q114, the economy’s inability to more effectively tap into the growing number of young potential workers will limit real GDP growth compared with previous years,” it said.
“With significant poverty and inequality, risks to social stability in Nigeria remain tilted firmly to the downside.
“Failure to create employment opportunities for displaced and economically disenfranchised people has already contributed to growth in membership of Boko Haram and Islamic State in West Africa’s ranks in recent years, with the groups continuing to pose major threats to Nigerian security,” it added.