Country Report Nigeria December 2008

Outlook for 2009-10

• Major challenges for the president, Umaru Yar'Adua, will be to bring stability to the turbulent Niger Delta region and to find a solution to the ongoing energy crisis, under which nationwide power cuts are commonplace.
• Economic policy reform will be slow, as the country stands at a crossroads between implementing tough, unpopular market reforms and pandering to nationalistic and pro-subsidies interest groups.
• With the oil sector operating below potential and the non-oil sector suffering from the global financial crisis, real GDP growth is expected to fall back from the levels witnessed in recent years, to 4.6% in 2009 and 5.4% in 2010.
• Food and fuel prices are expected to ease in 2009-10, but excess liquidity will continue to make it hard for the Central Bank of Nigeria to control inflation, which is forecast to average 10.3% in 2009 and 9.2% in 2010.
• In line with the global slowdown, our forecasts for oil prices have again been cut, to US$65/barrel in 2009 (previously US$75/b), before recovering slightly to US$68/b in 2010 (previously US$82/b).
• Nigeria's overall current account is forecast to record a deficit of 6.2% of GDP in 2009 (previously 4.4% of GDP) and 5.6% of GDP in 2010 (previously 2.5% of GDP), whch takes into account our expectation of lower oil prices.

Monthly review

• MrYar'Adua has sacked 20 ministers in a prelude to a long-awaited reshuffle. However, this has done little to end the uncertainty over the new cabinet, as by mid-November the president had yet to submit a full list of new ministers.
• The president has begun legal proceedings against an Abuja-based newspaper for falsely reporting that the Nigerian leader was critically ill. Rumours over MrYar'Adua's health have persisted since he came to power.
• The court of appeal has ousted the governor of the southern state of Edo. The court declared that Adam Oshiomhole, a member of the opposition Action Congress, was the rightful winner.
• The federal government's draft 2009 budget proposes total spending of N2.68trn (US$22.9bn) next year. This represents a 2.6% reduction from N2.75trn in 2008 and reflects the worsening outlook for oil revenue.
• The Nigerian National Petroleum Corporation (NNPC) has announced that the country will reduce its crude oil export volume by 5% in November and December, in line with OPEC's decision to cut production.
• The Central Bank of Nigeria has expanded its discount window operations in a further move to boost financial sector liquidity.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;49;47
NAICS Code: 52;22;48