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Nigeria Country Risk Report Q2 2019

Nigeria Country Risk Report Q2 2019

Key View:

We retain our view that the main opposition challenger, Atiku Abubakar, will win the February 16 presidential polls over the incumbent, Muhammadu Buhari, although it will be a very tight race. A victory for Abubakar could see a modestly investment-friendly environment in Nigeria, with the candidate pledging cur-rency and oil sector reform, and a pro-business rather than pro-interventionist stance, although he will face strong resistance from vested interests.

Nigeria's multi-tiered currency regime is likely to remain in place in the immediate aftermath of the February elections, with little movement likely in the interbank or Investors & Exporters exchange rates. In the longer term, we anticipate a move towards a unification of the rates, as part of moves towards a more free-market approach pledged by Abubakar.

The proposed 2019 national budget targets a reduction in the fiscal deficit to 1.3% of GDP, but this is unlikely to be attained. State oil revenues will be boosted by the start-up of key fields, and – in the event of an Abubakar victory – the passage of key legislation. However, the projected 23.7% increase in oil revenues seems likely to be overly ambitious. Recurrent spending will exceed budgeted levels, while some overshoot in capital expenditure is also possible.


Executive Summary
Core Views
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Modest Uptick In Nigerian Growth But Hydrocarbons Dependence Will Persist
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: NET EXPORTS FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
Outlook On External Position
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
Monetary Policy
Nigeria Moves Towards Neutral Monetary Policy Stance
Monetary Policy Framework
Fiscal Policy And Public Debt Outlook
Nigeria's Fiscal Deficit Will Continue To Exceed Target
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
NGN: Exchange Rate Reform Unlikely In Nigeria In The Short Term
TABLE: FITCH SOLUTIONS CURRENCY FORECAST
Nigeria Country Risk Q2 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report is solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.Contents10-Year Forecast
The Nigerian Economy To 2028
Growth Will Recover But Oil Dependence Will Act As A Constraint
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
TABLE: MAIN SCENARIOS
Long-Term Political Outlook
Demographics Pose Potential Time Bomb
Operational Risk
TABLE: OPERATIONAL RISK
Conflict Risk
TABLE: MAIN ACTIVE TERRORIST GROUPS
TABLE: POLITICAL VIOLENCE RISK
TABLE: MAJOR CONFLICT FLASHPOINTS
TABLE: BUSINESS RESPONSE TO CONFLICT RISK
Transport Network
TABLE: ROAD RISKS
TABLE: RAIL RISKS
TABLE: PORTS AND INLAND WATERWAYS RISKS
TABLE: AIR TRANSPORT RISKS
Global Macro Outlook
Downside Risks To Global Growth
TABLE: GLOBAL FORECASTS (2018-2023)
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: NIGERIA – MACROECONOMIC DATA AND FORECASTS

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