The economists at the office of Pricewaterhouse Coopers (PwC) Nigeria believe the economy is on track for a broad-based recovery,
but were quick to add that the management of political risk is crucial to
Nigeria’s future, reports ITRealms.
The PwC experts in a new report Nigeria's economic recovery - Defining the path for
economic growth’ an extract of which is made
available to ITRealms.
The report, ITRealms gathered, noted that asides the
improvement in real GDP following the exit from recession in the second quarter (Q2)
of 2017, the performance across several other macro-indicators suggest that the
economy has turned a corner.
“Some of these indicators include: headline
inflation at a 16 month low at 15.9 per cent year-on-year in September, maintenance
of trade surplus for 3 consecutive quarters, Purchasing Managers Index (PMI)
remaining above the 50 points threshold for 6 consecutive months and the
foreign reserves up to a 34-month high.
In addition, PwC further assessed the fundamental
determinants of economic growth, with findings suggesting that economic freedom, consumption
growth and investment share in GDP are significant drivers of the Nigerian
economy.
The
Partner and Chief Economist PwC Nigeria, Dr. Andrew S. Nevin, said, “We find
that an increase in the economic freedom index by 1 point could lead to a 1.7
percentage points increase in Nigeria's economic growth. This underscores the
role of economic policies as a major catalyst for economic development.
Similarly, a one percentage point increase in investment share in GDP and
consumption growth were found to be associated with 0.2 percentage points and
0.7 percentage points increase in economic growth respectively.”
To show Nigeria's potential economic performance over the next 5 years,
the report, he said, presents three scenarios in which PwC examines the impact
of political shocks, and the implementation of structural reforms and economic
diversification on key economic indicators in Nigeria.
ITRealms equally reports that PwC in its analysis, assumed that oil
continues to be the main driver of fiscal and export revenues over the forecast
period.
“As such, the extent to which the Nigerian economy moves towards its near-term
development aspirations is dependent upon the success of its import substitution
policies,” part of the report read.
Andrew declared that in scene 1, real Gross Domestic Product (GDP)
growth peaks at 7.0 per cent in 2022 and remains in line with trend, reflecting
the implementation of structural reforms, and successful traction in the
execution of import substitution policies.
“The resultant improvement in the macroeconomic environment leads to
increased investment and per capita GDP. However, in scenario 2, the
implementation of key reforms evolves at a slow pace and economic growth
averages 3.3 per cent over the forecast period, reaching 5.0 per cent in 2022.
A mix of political and security shocks in scenario 3 which bring about a
significant decline in revenues result in no growth (0.0 per cent) in 2019. Subsequently,
growth recovers to 4.3 per cent by 2022,” he submitted.
Chuks Egbune/GEE
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