Oil is Nigeria's main source of foreign exchange earnings
and government financing. As a result, growth expectations for the
economy have deteriorated following recent drop in oil prices. The
Nigerian Ministry of Finance projects growth this year of 5.5%,
down from 6.4% at the start of 2014.
With a lot of uncertainty surrounding the economy, our
economists have developed three economic scenarios to help public
and private sector organisations prepare for an uncertain
environment in 2015 and 2016. In these scenarios, we explore two
types of shocks: an oil price shock and a political shock.
We expect that even under a benign economic scenario, the
Nigerian economy will struggle to realise growth much higher than
4.0%. Nigeria's economy has tended to suffer following an oil
price crash, although its resilience has improved in more recent
times. Getting the policy response right matters as falling
economic growth imposes a real 'human' cost on the
population.
