Nigeria

GDP growth was 7% in Q4 2012, a little lower than the corresponding quarter in 2011. Overall growth in 2012 was 6.5%. The non-oil sector remains buoyant, rising 8.2% on the year in Q4. But the oil sector posted a decline of about 4% in 2012, as it suffered from the worst flooding in 50 years. Oil output is expected to maintain current levels in 2013, as it is limited by weak global demand and an expected 5% drop in price. GDP growth is forecast to slow to 6.5%.

Inflation remained high in 2012, averaging 12.2% – with core inflation close to 14%. Although the headline rate dipped to 9.6% in February, the Central Bank of Nigeria again kept interest rates on hold at its January policy meeting. The decision reflected concerns about high spending by the states and the uncertain global backdrop.

Despite the flooding, strong oil exports still helped to lift the current account surplus to about US$10b in 2012, despite rising imports and heavy income and services outflows. With world oil prices expected to ease and imports continuing to rise, the surplus is forecast to fall back in 2013. But reserves have risen to over US$47b. The external position should remain solid, as it is underpinned by high oil revenues. In turn, annual GDP growth should reach 5%-6% over the medium term.

Inflation

Source: Oxford Economics.

Real GDP growth

Source: Oxford Economics.

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