Country Report Nigeria June 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 2.2% in 2009.
• Real GDP growth is expected to improve to 3.7% 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 8.7% of GDP in 2009 (previously 10.4% of GDP), before falling to 6% of GDP in 2010 (previously 6.3% of GDP).

Monthly review

• The military has launched a major campaign in the Niger Delta to root out and neutralise the bands of armed militants. The militants have responded by intensifying their actions against the oil sector.
• Senior legislators and power officials have been charged with fraud in a corruption case proving embarrassing for Mr Yar'Adua.
• Lamido Sanusi, the former managing director of First Bank of Nigeria, has been appointed as the new governor of the Central Bank of Nigeria (CBN).
• The CBN had begun to loosen the foreign-exchange controls imposed earlier in the year to shore-up a falling naira currency and protect foreign reserves.
• The government has retaken control of a telecommunications utility, Nigeria Telecommunications (Nitel), which has performed badly in recent years.
• The Nigerian Stock Exchange (NSE) has showed signs of recovery in the second quarter of 2009, after a sustained downturn since March 2008.
• Recent data show that China is by far Nigeria's largest source of imports, whereas the US remains the main export destination.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52