Nigeria: 2022 Macroeconomic Outlook – Consolidating Recovery

January 14, 2022/CardinalStone Research

Executive Summary

President Buhari and Four Other Nigerians Make it to the African Energy Chamber’s (AEC) TOP 25 Movers & Shakers List for 2021 (2)
(Source: African Energy Chamber)

Nigeria appears on course to surpass its pre-COVID 5-year peak growth of 2.21%. Precisely, we project growth rates of 2.65% and 2.70% for 2021 and 2022, respectively. However, these projected economic outturns still lag the long-run trend growth of 4.0% on the impact of inadequate structural and policy responses to the plunge in oil prices in 2015 and 2020.

This dichotomy makes it hard to situate Nigeria’s economic evolution on the business cycle. Do you, for instance, assume that the emergence of COVID-19 interrupted the growth trajectory following the 2016 recession and that the economy is now back on track towards its long-run mean growth? Or that the 2015 oil crash signaled a regime change and that pre-2015 growth rates are no longer feasible in the medium term, making 2.0% to 2.8% growth range the new normal?

In line with the latter, we posit that structural incumbrances place a cap on near-to-medium term growth, with the country’s unconventional FX market management the clearest example of these impasses. These concerns may likely continue to irk foreign investors amid the growing burden of subsidies and importation on reserves.

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