Nigeria Development Update, June 2021 : Resilience through Reforms
In 2020, Nigeria experienced its deepest recession in four decades, but growth resumed in the fourth quarter as pandemic restrictions were eased, oil prices recovered, and the authorities implemented policies to counter the economic shock. As a result, in 2020 the Nigerian economy experienced a smaller contraction (-1.8 percent) than had been projected when the pandemic began (-3.2 percent). As part of its response, the government carried out several long-delayed policy reforms, often against vocal opposition. Notably, the government (1) began to harmonize exchange rates; (2) began to eliminate gasoline subsidies; (3) started adjusting electricity tariffs to more cost-reflective levels; (4) cut nonessential spending and redirected resources to COVID-19 (coronavirus) responses at both the federal and the state levels; and (5) enhanced debt management and increased public-sector transparency, especially for oil and gas operations. By creating additional fiscal space and maximizing the impact of the government’s limited resources, these measures were critical in protecting the economy against a much deeper recession and in laying the foundation for earlier recovery. However, several critical reforms are as yet incomplete, which threatens Nigeria’s nascent recovery. In the baseline scenario, Nigeria’s economy is expected to grow by 1.8 percent in 2021. Despite the current favorable external environment, with oil prices recovering and growth in advanced economies, reform slippages would hinder the renewed economic expansion and undermine progress toward Nigeria’s development goals. In a risk scenario, in which the government fails to sustain recent macroeconomic and structural reforms, the pace of economic recovery would slow, and GDP growth couldbe just 1.1 percent in 2021.
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| Format: | Report biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021-06
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| Subjects: | ECONOMIC GROWTH, ECONOMIC OUTLOOK, DEVELOPMENT AGENDA, OIL PRICES, EXTERNAL SECTOR, MONETARY POLICY, CREDIT, FISCAL TRENDS, CORONAVIRUS, COVID-19, PANDEMIC IMPACT, POVERTY, |
| Online Access: | http://documents.worldbank.org/curated/en/389281623682704986/Resilience-through-Reforms http://hdl.handle.net/10986/35786 |
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| Summary: | In 2020, Nigeria experienced its deepest
recession in four decades, but growth resumed in the fourth
quarter as pandemic restrictions were eased, oil prices
recovered, and the authorities implemented policies to
counter the economic shock. As a result, in 2020 the
Nigerian economy experienced a smaller contraction (-1.8
percent) than had been projected when the pandemic began
(-3.2 percent). As part of its response, the government
carried out several long-delayed policy reforms, often
against vocal opposition. Notably, the government (1) began
to harmonize exchange rates; (2) began to eliminate gasoline
subsidies; (3) started adjusting electricity tariffs to more
cost-reflective levels; (4) cut nonessential spending and
redirected resources to COVID-19 (coronavirus) responses at
both the federal and the state levels; and (5) enhanced debt
management and increased public-sector transparency,
especially for oil and gas operations. By creating
additional fiscal space and maximizing the impact of the
government’s limited resources, these measures were critical
in protecting the economy against a much deeper recession
and in laying the foundation for earlier recovery. However,
several critical reforms are as yet incomplete, which
threatens Nigeria’s nascent recovery. In the baseline
scenario, Nigeria’s economy is expected to grow by 1.8
percent in 2021. Despite the current favorable external
environment, with oil prices recovering and growth in
advanced economies, reform slippages would hinder the
renewed economic expansion and undermine progress toward
Nigeria’s development goals. In a risk scenario, in which
the government fails to sustain recent macroeconomic and
structural reforms, the pace of economic recovery would
slow, and GDP growth couldbe just 1.1 percent in 2021. |
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