LAGOS – A Price Water Cooper Economic Outlook Report has said that Nigerians in Diaspora sent an estimated $25 billion in remittances to the country in 2018, representing 6.1% of the nation’s Gross Domestic Product
According to the report, the figure translates to 83% of the Federal Government budget in 2018 and 11 times the Foreign Direct Investment flows in the same period. It added that Nigeria’s migrant remittance inflows was also 7 times larger than the net official development assistance (foreign aid) received in 2017 of $3.359 billion
The report said depressed oil demand coupled with production supply cuts and price fluctuations will impact the economy’s growth trajectory, adding that the real GDP growth expected to grow slightly to 2.5%y/y on moderate improvements in net exports and domestic demand.
It also said that the investment climate will also be dampened in the short-term by uncertainty usually associated with the pre and post-election cycles in the country.
‘’We expect revenues to underperform budget by 0.27% as a shortfall in oil supply offsets the impact of oil price growth scenarios. Consequently, debt service to revenue expands higher than the projected 31% in the budget. Fiscal deficit widens by 79% to NGN4.55 trillion (3% of GDP). We expect that the deficit will be funded by an increased issuance in the domestic bond market”
The report said in 2018, PWC predicted a moderate increase in FPI and a slowdown in by HY’18, driven by uncertainty ahead of the elections, adding that it expects FPI growth in HY’19 to remain low and lower than pre-2018 level.
‘’We expect FDI flows to be dampened by lackluster implementation of policy reforms Key risks to foreign investment include: declining interest rate differentials as advanced economies continue to tighten policy rates, political instability following the 2019 elections, unfavorable investment climate, Broad macroeconomic instability,’’ .it added
According to the report, fluctuating prices leave Nigeria’s oil-driven economy vulnerable to external shocks, while oil production curve continues to slope downward and below the 2 mbpd average target set by the central government.
The report said since Organisation of Petroleum Exporting Countries(OPEC), has lowered Nigeria’s oil production level to 1.685 mbpd, it expects this cut coupled with fluctuations in oil price and potential supply disruptions to impact the 2019 budget implementation
‘’Early 2019, we expect the forex market to remain largely stable, however, volatility in the oil market may cause depreciation that could range from about N390 to N415 per US$ by year-end 2019. In the bid to sustain its policy of exchange rate stability amidst sustained demand pressures, the Central Bank of Nigeria (CBN) increased dollar injections into the foreign exchange market by 87 percent to $40 billion in 2018,’’it added.