Analysts at Renaissance Capital have predicted that Nigeriaâ€™s Gross Domestic Product (GDP) will grow by 2 per cent in 2018.
Renaissance Capital stated this in a report titled: â€œNigeria: 3Q17 GDP- Uneven growth recovery,â€ obtainedÂ tuesday.
Nigeriaâ€™s growth strengthened to 1.4 per cent year-on-year in third quarter 2017, compared with -2.3 per cent year-on-year recorded in the third quarter of 2016.
But the Renaissance Capital expressedconcern that the non-oil sectorâ€™s growth slipped back into negative territory of -0.8per cent year-on-year, versus zero growth a year earlier, despite agricultureâ€™s consistent growth.
â€œUneven growth explains why Nigeriaâ€™s growth recovery is fragile. We maintain our 0.7 per cent growth forecast for 2017, and expect capital expenditure and a pick-up in demand to help lift growth to two per cent in 2018. The lopsidedness of the recovery implies downside risk to growth.
â€œOil sector is (almost) single-handedly driving the recovery. This rebound in production followed the repair of pipelines in the second quarter of 2017, which led to more than 200k b/d of crude oil production coming back on stream, and the conclusion of an amnesty programme for Niger Delta militants, which resulted in the cessation of attacks on oil facilities,â€ it added.
It stressed that Nigeriaâ€™s recovery is largely driven by the oil sector, stating that outside agriculture, the remaining two-thirds of the economy is sluggish.
â€œThe downside risks to 2018 growth will increase in the run-up to the February 2019 elections. â€œTypically, economic activity slows in the months leading to the polls, particularly as the private sector adopts a wait-and-see approach because of uncertainty regarding policy continuity.
â€œNigeriaâ€™s electoral history also shows that troublemakers tend to stoke tensions in sensitive regions, such as north-eastern Nigeria and the Niger Delta, for political ends.
â€œInstability in the latter region could have material implications on oil production, and by implication, GDP growth,â€ it added.