One of the world’s leading credit rating agencies, Moody’s Investor Services, has predicted a 2.5 per cent GDP growth for Nigeria this year.
According to Moody’s Vice President, who is also the lead analyst for Nigeria, Lucie Villa, Nigeria’s economy would bounce back this year, going by the on ongoing recovery in oil production.
The rating agency’s chief said: “the government’s balance sheet is strong, with debt at around 16.6 per cent of Gross Domestic Product in 2016.
“Also, despite its interest burden rising to 19.8 per cent of revenue, Nigeria’s capital markets remain a reliable and captive source of liquidity and funding for the government.”
Moody’s, however, said Nigeria’s weak institutional framework, especially in terms of “the rule of law, government effectiveness and control of corruption,” would have a significant impact on its economic growth and fiscal strength, and thereby constrain the country’s b1 rating.
Moody had in a Global Research report released in September 2016 warned of a further contraction of the nation’s economy, while predicting that the declining value of the naira would engender a marginal increase in Nigeria’s external debt to 5.2 per cent of Gross Domestic Product, GDP, by the end of 2016. It was 3.3 per cent at the end of 2015.
The agency however pointed out the devaluation of the naira is a positive as it would help the naira to better absorb external shocks over time, while dollar availability should gradually increase.