A combination of collapse in oil prices and the COVID-19 pandemic is expected to plunge the country’s economy into a severe recession, the worst since the 1980s, according to the latest World Bank Nigeria Development Update.
The World Bank in statement, titled “Nigeria In Times of COVID-19: Laying Foundations for a Strong Recovery,’’ estimated that Nigeria’s economy would likely contract by 3.2% in 2020.
The International Monetary Fund had on Wednesday projected a -5.4 percent growth for Nigeria in 2020 due to the pandemic.
The projection in the World Bank report assumed that the spread of COVID-19 in Nigeria would be contained by the third quarter of 2020.
The report said: “If the spread of the virus becomes more severe, the economy could contract further. Before COVID-19, the Nigerian economy was expected to grow by 2.1% in 2020, which means that the pandemic has led to a reduction in growth by more than five percentage points.
“The macro-economic impact of the COVID-19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus. Oil represents more than 80% of Nigeria’s exports, 30% of its banking-sector credit, and 50% of the overall government revenue.
“With the drop in oil prices, government revenues are expected to fall from an already low 8% of GDP in 2019 to a projected 5% in 2020. This comes at a time when fiscal resources are urgently needed to contain the COVID-19 outbreak and stimulate the economy.”
Credit: Expensive Information