CEM REPORT, ECONOMY | Experts have predicted Nigeria’s gross domestic product (GDP) to continue to grow at a relatively slow pace of 3% in 2023.
They say expected fuel subsidy removal will keep pressure on domestic prices in 2023.
In its latest Global Economic Outlook, multinational advisory, KPMG attributes the slow pace to the slowdown in economic activity that typically characterizes periods of political transition in Nigeria.
Also, they said growth will be negatively affected by the Naira Redesign Policy introduced in Q4 2022 and Q1 2023.
KPMG’s outlook indicates that implications of the Naira Redesign Policy on key non-oil sectors like manufacturing, trade, accommodation and food services, transportation, and other services, will further slow down overall GDP growth in 2023.
The report also adds the spillover from an expected slowdown in the global economy in 2023 and its trade and financial flow implications are expected to drag on GDP.
KPMG Outlook also predicts that Nigeria’s incoming government administration will face a deeply rooted challenging environment, characterized by fragile and slow economic growth and challenges in the foreign exchange market. Additionally, government revenue will remain inadequate to support much-needed expenditures, leading to a high debt stock and high debt service payments.
On the bright side, the report predicts that the slow rate of 3% growth in 2023 is hinged on the measures being taken to tackle security issues, noting that the measures will yield recovery in the oil sector and boost growth in telecommunications and trade services.
In an appraisal of the full year of 2022, KPMG analysts say that growth in 2022 was driven by the non-oil sector, as continuous recovery in household consumption boosted spending, particularly in the finance and insurance services, telecommunications, and transportation and storage services.
“While the non-oil sector grew by 4.84%, the oil sector contracted by 19.22%, largely attributed to worsening oil theft, pipeline vandalization, underinvestment, and other operational challenges inhibiting oil production. Accordingly, oil output (including condensates) declined from 2.07 million barrels per day in Q1 2020 to 1.34 by Q4 2022.”