Country Report Nigeria October 2009

Outlook for 2010-11

• Prospects for 2010-11 largely depend on whether the president, Umaru Yar'Adua, is able to speed up the slow progress of reform to encourage improved domestic economic and political performance.
• A presidential election is due in 2011. Should his performance continue to be judged unsatisfactory, pressure may mount on Mr Yar'Adua not to stand. Assuming he does, Mr Yar'Adua will be the favourite to win.
• Economic policy reform is likely to be slow, as the country stands at a crossroads between implementing tough, unpopular market reforms and pandering to nationalistic and pro-subsidy interest groups.
• Economic growth will be buoyed by moderate oil sector growth, and more robust performance in the non-oil sector. Real GDP growth is expected to improve from an estimated 4.2% in 2009 to 5.3% in 2010 and 5.5% in 2011.
• Food and fuel prices are expected to ease in 2009-10, but loose monetary policy and election-related spending will mean that inflation falls only slowly, to an average of 8.8% in 2010 and 8.3% in 2011.
• Trends in the current account will mirror trends in international oil prices. Stronger prices in 2010 will reduce the current-account deficit to 2.2% of GDP, before weaker prices in 2011 cause it to increase to 4.1% of GDP.

Monthly review

• The federal government's 60-day amnesty offer to armed militants in the oil-producing Niger Delta expired on October 4th. Officials claim the amnesty programme has been a success.
• The government now faces the difficult challenge of transforming the short-term advance into the conditions for long-term peace in the Delta. The first major challenge will be creating jobs in the region.
• The Central Bank of Nigeria has had to bail out four more undercapitalised banks after an audit determined that they faced liquidity problems and needed funds to continue normal operations.
• The government has announced that it will soon disburse US$2bn from the country's Excess Crude Account between federal, state and local governments in effort to stimulate the overall economy.
• The National Bureau of Statistics has published revised GDP data indicating that Nigeria has so far been relatively unscathed by the impact of the global recession and weak oil prices.