The collapse in crude oil costs, coupled with the COVID-19 pandemic, is anticipated to “plunge the Nigerian economic system right into a extreme recession, the worst because the 1980s”, the World Bank mentioned on Thursday.
The World Bank, in a brand new report, titled ‘Nigeria in instances of COVID-19: Laying foundations for a powerful restoration,’ estimated that Nigeria’s economic system would seemingly contract by 3.2 per cent this yr.
“This projection assumes that the unfold of COVID-19 in Nigeria is contained by the third quarter of 2020,” it mentioned.
The financial institution mentioned if the unfold of the virus grew to become extra extreme, the economic system might contract additional.
It mentioned, “Before COVID-19, the Nigerian economic system was anticipated to develop by 2.1 per cent in 2020, which implies that the pandemic has led to a discount in development by greater than 5 share factors.
“The macroeconomic influence of the COVID-19 pandemic will seemingly be important, even when Nigeria manages to comprise the unfold of the virus. Oil represents greater than 80 per cent of Nigeria’s exports, 30 per cent of its banking-sector credit score, and 50 per cent of the general authorities income.”
According to the report, with the drop in oil costs, authorities revenues are anticipated to fall from an already low eight per cent of GDP in 2019 to a projected 5 per cent in 2020.
The Country Director for Nigeria, World Bank, Shubham Chaudhuri, mentioned, “While the lengthy-time period financial influence of the worldwide pandemic is unsure, the effectiveness of the federal government’s response is necessary to find out the pace, high quality, and sustainability of Nigeria’s financial restoration.
“Besides speedy efforts to comprise the unfold of COVID-19 and stimulate the economic system, will probably be much more pressing to deal with bottlenecks that hinder the productiveness of the economic system and job creation.”