The World Bank has announced that the collapse in crude oil prices, coupled with the COVID-19 pandemic, is expected to “plunge the Nigerian economy into a severe recession, the worst since the 1980s”.
In a new report released on Thursday, titled ‘Nigeria in times of COVID-19: Laying foundations for a strong recovery,’ the World Bank projected that Nigeria’s economy would likely contract by 3.2 per cent this year.
The World Bank said, “This projection assumes that the spread of COVID-19 in Nigeria is contained by the third quarter of 2020”. However, it said the economy would suffer more severely, if the virus continues its spread in the nation.
It also reported, “Before COVID-19, the Nigerian economy was expected to grow by 2.1 per cent in 2020, which means that the pandemic has led to a reduction in growth by more than five percentage points.
“The macroeconomic impact of the COVID-19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus. Oil represents more than 80 per cent of Nigeria’s exports, 30 per cent of its banking-sector credit, and 50 per cent of the overall government revenue.”
Government revenues are expected to take a heavy blow from the drop in oil prices. It is estimated to drop from 8% of GDP in 2019 to an estimated 5% in 2020. This could be disastrous for the economy as the revenue is already at a dangerously low point.
The Country Director for Nigeria, World Bank, ShubhamChaudhuri, said, “While the long-term economic impact of the global pandemic is uncertain, the effectiveness of the government’s response is important to determine the speed, quality, and sustainability of Nigeria’s economic recovery.
“Besides immediate efforts to contain the spread of COVID-19 and stimulate the economy, it will be even more urgent to address bottlenecks that hinder the productivity of the economy and job creation.”
