Fitch Agency Revises Nigeria’s Growth Projection for 2021

Fitch Ratings, one of the world’s leading agencies, has revised down Nigeria’s growth projection for 2021.

The global rating agency predicted that Nigeria will grow by 1.5 percent in 2021, down from the previous 2.3 percent projection.

Fitch based its latest prediction on weaker base effects coming out of a shallower contraction recorded by the country in 2020.

While the agency said oil exports would be the main growth driver for Nigeria in 2021, consumer spending and investment were expected to remain subdued because of the rising inflation and the slow distribution of the COVID-19 vaccine.

Fitch Ratings, however, said Africa’s largest economy could expand by 2.7 percent in 2022, adding that by then it “expect Nigeria’s vaccination programme to gather pace, which will result in private consumption and fixed investment accelerating.”

“We at Fitch Solutions have revised our estimate for Nigeria’s real Gross Domestic Product (GDP) to a contraction of 1.9 per cent in 2020, compared to our previous estimate of a 3.2 per cent fall. The revision follows the release of stronger than expected GDP data indicating that the economy exited recession in the fourth quarter of 2020, growing by 0.1 per cent year-on-year, after contracting by 3.6 per cent in the third quarter of 2020 and by 6.1 per cent in the second quarter of 2020.

“The agriculture and services sectors led the Q4 2020 rebound, expanding by 3.4 per cent and 1.3 per cent respectively, resulting in non-oil growth rising by 1.7 per cent compared to a 2.5 per cent fall in Q3 2020. The oil sector (around 8.0% of GDP) contracted by 19.8 per cent in Q4 2020 – its third consecutive quarterly contraction – because of falling oil production and weak prices.

“Crude production slowed to 1.56 million barrels per day (b/d) in Q4 2020 from 1.67 milion b/d in Q3 2020, partly because of Nigeria’s commitments under the OPEC+ deal, while the price of Brent fell to an average of $43.2 per barrel (/bbl) in 2020 compared to $64.2/bbl in 2019,” it stated.