Nigerian Economic Summit Group (NESG) yesterday said the Nigerian economy will likely exit recession in 2021.
It also raised concerns about rising unemployment and poverty levels in the country.
In its economic outlook for the country in 2021, the NESG projected that the country’s GDP will see a growth rate of 0.9 per cent which, is higher than 0.7 per cent predicted by the African Development Bank (AfDB) and lower than the 1.5 and 1.0 per cent projected by the International Monetary Fund (IMF) and the World Bank.
NESG, in its outlook for the year, said GDP growth would improve and possibly return to positive region but unemployment and poverty rates will maintain an upside position.
“As the global economy recovers in the later part of 2021 and given the anticipated stability in crude oil price, we expect Nigeria’s GDP growth to return to a positive region in 2021. However, growth in output will not be accompanied by a reduction in poverty, unemployment and underemployment rates, especially given the weak correlation between output and these indicators in the short term in Nigeria.
“With inflation at over 15 per cent, NESG said prices will continue to remain high as inflationary pressure will be driven by petrol pricing, increased electricity tariff, foreign exchange challenges, insecurity and supply chain disruptions.
“We believe that investors will seek to take advantage of Nigeria’s large market, as well as leverage the opportunities that the AfCFTA offers.
“Nigeria is also expected to narrow its trade deficit in the year as earnings from crude oil improve. However, reforms are needed to boost non-oil export earnings and attract significant capital into key sectors such as manufacturing, agriculture, trade and ICT.
“The challenge of insecurity became severe in 2020 with incessant kidnappings, robbery, theft and other forms of crimes in several parts of the country.
“This created panic among citizens and investors and is a major factor that limited huge inflow of private capital into crucial sectors of the economy. If unchecked, the insecurity situation will intensify and could slow down economic recovery in 2021.
“Despite the rising cases of COVID-19 infections in the country, the group said it does not expect the implementation of lockdown and movement restrictions as experienced in April 2020. However, selected restrictions which will affect sectors such as education, transport, accommodation and food services, among others will be implemented.
“Despite the revenue challenges associated with the pandemic, the government reaped some benefits from the tax reforms that came with the Finance Act 2019, particularly the increase in Value Added Tax (VAT). With the discovery of vaccines for COVID-19, the oil market is expected to marginally pick up. Non-oil revenue is also expected to improve in anticipation of an economic recovery in 2021”, NESG stated.