EIU sees Nigeria economy at 7yr-high as oil production recovers in 2022

Nigeria’s economic growth will quicken in 2022 to a seven-year high of 3.3 percent before rising further by 3.8 percent and 3.9 percent in 2023 and 2024 respectively, as crude oil production recovers from a record low this year, the Economist Intelligence Unit said in a report Tuesday.

If the economy expands as predicted by EIU, it will also mark the first time Africa’s biggest oil producer has expanded faster than population growth rate since 2015, snapping six straight years of decline that has thrown more Nigerians into the poverty pit.

Improving oil production will serve as a trigger for other factors likely to boost growth in those years, according to the EIU.

“A more stable foreign exchange market, lower inflation and a smaller fiscal deficit freeing up credit to the private sector will also contribute and allow growth averaging 3.8 percent in 2023-2024,” the EIU team noted.

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The EIU expects Nigeria’s foreign exchange scarcity to abate from 2022, “as the current account turns to surplus, owing to higher exports and a lower import bill for petrol, following an increase in local refining capacity.”

The picture is however predicted to change from 2025 with growth cooling to 1.7 percent and a further 1.0 percent in 2026, as global oil prices dip, a sign that Nigeria’s reliance on its oil sector remains strong.

A devaluation of the naira is also likely to happen in that period, according to the EIU team.

Nigerians, from households to manufacturers and investors, have been hard hit by a bruising fx shortage that has caused inflation to soar to about double of the Central Bank’s preferred target.

Despite a slowdown in the last six months, headline inflation in Nigeria remains at over 16 percent as against the CBN‘s target of between 6-9 percent.