World Bank: Nigeria may face worst recession in 40 years
The World Bank, on Thursday, said the recent collapse in crude oil prices and the COVID-19 pandemic may “plunge the Nigerian economy into a severe recession, the worst since the 1980s.”
World Bank also estimated that Nigeria’s economy would likely contract by 3.2 per cent this year in a new report, titled ‘Nigeria in times of COVID-19: Laying foundations for a strong recovery’.
“This projection assumes that the spread of COVID-19 in Nigeria is contained by the third quarter of 2020,” the statement reads.
The bank however said if the spread of the virus became more severe, the economy could contract further.
“Before COVID-19, the Nigerian economy was expected to grow by 2.1 per cent in 2020, which means that the pandemic has led to a reduction in growth by more than five percentage points.
“The macroeconomic impact of the COVID-19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus. Oil represents more than 80 per cent of Nigeria’s exports, 30 per cent of its banking-sector credit, and 50 per cent of the overall government revenue.” it adds
According to the report, with the drop in oil prices, government revenues are expected to fall from an already low eight per cent of GDP in 2019 to a projected five per cent in 2020.
The Country Director for Nigeria, World Bank, Shubham Chaudhuri, said, “While the long-term economic impact of the global pandemic is uncertain, the effectiveness of the government’s response is important to determine the speed, quality, and sustainability of Nigeria’s economic recovery.”
He concluded that “Besides immediate efforts to contain the spread of COVID-19 and stimulate the economy, it will be even more urgent to address bottlenecks that hinder the productivity of the economy and job creation.”