Nigeria’s economic recovery from last year’s coronavirus pandemic-induced contraction could be slower than previously expected, according to American bank, JP Morgan.
Nigeria’s economy is likely to expand by just 1.5 percent in 2021, JPMorgan Chase Bank NA analysts including Gbolahan Taiwo and Ayomide Mejabi said in an emailed note.
That’s half the 3 percent growth prediction of the government and also below the International Monetary Fund’s forecast of 2.5 percent.
A “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,” JPMorgan said.
Nigeria’s central bank unexpectedly halted the sale of foreign exchange to bureaus de change and increased supplies to banks in July, though that measure hasn’t helped ease the scarcity.
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The government however just successfully raised $4 billion in Eurobonds Tuesday which analysts say will help improve the foreign exchange scarcity.
The Eurobond will take Nigeria’s external reserves to $40 billion, according to CBN data.
Analysts say restoring foreign investor confidence in the economy will go a long way in increasing much needed dollar inflows to the economy.
Africa’s biggest economy shrank 1.92 percent last year, the most since at least 1991, according to IMF data.
The IMF’s growth forecast already places Nigeria behind South Africa and Egypt which are both tipped to grow by 4 percent and 2.8 percent this year.
