The Nigeria Economic Summit Group on Monday projected that under a best case scenario, with global oil price averaging $35/barrel and Nigeria’s oil production standing at 1.3 million barrels per day, the country’s real GDP may drop by 4.1% while investments will drop by 39.4 percent this year.
The group’s latest projections for the economy was contained in its May 2020 report titled ‘Macroeconomic Outlook Update: COVID-19, Global Oil Price and The Nigerian Economy’ sourced by Daily Trust. Under the scenario, the economic think tank group also foresees government’s revenue plunging by 40% while inflation rate may rise to an all-high level of 15%. It clarified: “GDP will decline by 4.1 percent in 2020, driven by contraction in Agriculture, Manufacturing, Oil & Gas and Trade sectors.
Investment will decline by 39.4 percent in 2020 as much investment would have gone into social security and palliatives. “Government revenue will plunge by 40 percent in 2020 as oil and non-oil revenues are constrained. Inflation averages 15 percent in 2020 sequel to the global supply chain and devaluation of naira from NGN306/US$ to NGN360/US$.
Under its second scenario or ‘Business as Usual situation, in which global oil price averaged $20/barrel and Nigeria’s oil production per day remains at 1.3 million barrels, the nation’s real GDP may decline by 5.3% while investment and government earned revenue for the fiscal year will dip by 50% and 51% respectively. It projected that inflation rate may hit 17.5%.
The group predicted that in a third scenario or ‘Worst Case’ whereby global oil price averaged $15/barrel and Nigeria’s oil output is maintained at 1.3 million/bpd, the nation’s real GDP may decline by 7.3% just as investment level may dip by 65% and government’s revenue by 63%. It projected that the inflation rate may hit an all-high rate of 18.4% The NESG stated that its projection was done based on the regional-wide Dynamic CGE model of the Nigerian Economic Summit Group (NESG-DynCGE-Model), which was revised to accommodate the uniqueness and peculiarities of the issues under consideration, being COVID-19 and the impact of weak oil price on the economy.
According to the group, the model involves dynamic optimization behavioural assumption while we extracted projections for 2020.
