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Nigeria's Economy to double in-between elections 2015, 2019
Nigeria’s Gross Domestic Product (GDP) has been projected to hit N156.3 trillion by 2019 when the next general election would be in the front burner once again. This indicates that the GDP would have almost doubled from this year’s size, all things being equal. The rebased real GDP at N82 trillion for 2013 was estimated at N84.9 trillion for 2014.
This analytical projection by the researchers at FSDH Securities, one of Nigeria’s leading investment houses, was however predicated on certain developments both in the short and medium terms.
But it appears the projection is highly optimistic giving its forecast growth rate of 5.68 per cent as many negative developments in the economy had forced many analysts to a downward review of growth forecasts.
The investment house has however reviewed its nominal GDP projection downward from N95.09 trillion to N84.9 trillion for 2015.
FSDH research outlined the factors that would impact the growth in the next four years in the short term range to include declining crude oil prices, the general election in the current national front burner and the resolution of security challenges. The medium-t-long term factors would include Power sector reform, Market and fiscal policy environment, infrastructure development.
Anaysts agree that a continued decline in oil price would eclipse investment in the sector, a development which is already happening with regards to bank lendings to the upstream subsector of the oil and gas industry. But the sector’s contribution to the real GDP has been on the decline and it is expected to further decline in the medium-to- long term. In the power sector the analysts see growth to be driven primarily by the level of investments in the privatised entities to ensure stable power supply to fuel the expected growths. They also hinged the growth in the sector on adequate supply of gas to the power plants to enable function at investment capacities.
The on-going electioneering activities is seen by the analysts as a pointer to what the economy would turn out at post-election. Basically stability and growth would follow a peaceful election outcome, and stable economic policy roll out subsequently.
The acceptance of the election results, according to FSDH analysts, would help to calm the currently frayed nerves of both domestic and foreign investors, leading to a possible massive return on investment (both portfolio and direct) and a corresponding massive inflows into the economy with a positive impact on the GDP.
It is also believed that while the long-stretched security crises in the North-Eastern part of the country had impacted negatively on the GDP, its quick resolution would, on the other hand impact positively on the economy. Analysts believe that the agriculture and mineral sectors’ contribution to the GDP was significant enough to have a profound impact on the overall result when the region in crises is a major contributor in this sector.
In the area of monetary and fiscal policy it is believed that a contractionary monetary and fiscal policy of the Central Bank of Nigeria (CBN) and the federal government could slow economic activities and reduce GDP in the short term, but with possible positive impact in the economy in the medium-to-long term due to the stabilization and growth impact of the tight policies.
In the area of infrastructural investment and development the analysts are of the view that poor infrastructure which had hitherto depressed growth would be given more serious attention especially with private sector involvements. This would release dormant assets and ease business developments across all sectors of the economy with massive impact on the GDP.