Country Report Nigeria July 2009

Outlook for 2009-10

• The world recession and consequent slump in oil prices is expected to hit Nigeria hard, representing a major challenge for the president, Umaru Yar'Adua, and his government.
• 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-subsidy interest groups.
• Poor performance in the oil sector combined with the fallout from the global financial crisis affecting other parts of the economy means that real GDP growth is forecast to slow to 2.3% in 2009.
• Real GDP growth is expected to improve to 3.8% in 2010 in line with the beginning of a global recovery.
• Food and fuel prices are expected to ease in 2009-10, but a weaker currency and looser monetary policy will mean that inflation falls only slowly, to an average of 11.4% in 2009 and 8.5% in 2010.
• An upward revision to oil prices has improved the outlook for the current account slightly, although prices and production will still be well down on 2008 levels.
• The current-account deficit is forecast at 6.2% of GDP in 2009 (previously 8.7% of GDP), before falling to 5.1% of GDP in 2010 (previously 6% of GDP).

Monthly review

• Mr Yar'Adua has declared an amnesty for armed militants in the oil-producing Niger Delta region, giving them until October 4th to surrender their weapons, renounce violence and accept rehabilitation to receive a pardon.
• The government has awarded such a pardon to a prominent rebel leader who had been facing trial. The main rebel group in the Delta responded by announcing a 60-day ceasefire.
• The Central Bank of Nigeria (CBN) has lowered its benchmark interest rate to 6% from 8% in an attempt to stimulate economic growth. The CBN also lifted the remaining foreign-exchange controls introduced earlier in the year.
• The new CBN governor, Lamido Sanusi, has expressed determination to push ahead with reform of the financial sector, particularly strengthening regulation to boost transparency and promote more efficient management.
• Nigerian National Petroleum Corporation and Russia's Gazprom have signed an agreement to jointly develop Nigeria's oil and gas sector.
• Oil ministers from Nigeria, Algeria and Niger signed an agreement to build a 4,128-km pipeline across their respective countries to deliver gas to Europe.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10;49
NAICS Code: 212;22