Lagos - A banking group has forecast a bleak
year for local consumers amid the declining economy.
Rand Merchant Bank, the South African-based financial
organisation, was overall downbeat at the country’s economic prospects.
“Unfeasible import substitution, a collapse in export
revenue and the resultant Naira depreciation will weigh heavily on the consumer
as rampant inflation erodes purchasing power,” said RMB in its latest Global
“We expect significant shrinkage in capital formation due
to limited resources and believe that policy uncertainty will continue to
discourage private sector investment. The contribution of net exports to
headline growth will remain muted over the forecast period as Nigeria struggles
to diversify its export basket.”
RMB believes Nigeria’s economy will stumble along in
2016, growing at a paltry 3,2 percent as
tighter monetary and financial conditions weigh on sectoral growth.
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Trend growth for the next five years is estimated at 4,7
“Nigeria’s rates of expansion, though competitive on a
regional basis, are sluggish compared to prior years, signalling a structural
slowdown in activity,” said RMB.
On Thursday, an international ratings agency, Fitch,
highlighted the downside risks to Nigeria’s sovereign credit profile arising
from recent policy responses to the flagging oil price.
In a note, Fitch pointed out that authorities risked
eroding fiscal and external policy buffers by increasing borrowing and
maintaining an “unorthodox’ foreign exchange policy stance.
Should the agency deem measures to be
inappropriate in enhancing economic growth and fiscal sustainability upon
review, it will likely downgrade the sovereign which is currently on negative
outlook, RMB stated.
- CAJ News