Nigeria: Macroeconomic Outlook 2022 – Consolidation of the recovery

Friday, January 14, 2022 / 3:312:00 a.m. / by CardinalStone Research / Header Image Credit: CardinalStone Research


Nigeria appears on track to surpass its 5-year peak pre-COVID growth of 2.21%. Specifically, we expect growth rates of 2.65% and 2.70% for 2021 and 2022, respectively. However, these projected economic results still lag the long-term trend growth of 4.0% due to the impact of insufficient structural and policy responses to the oil price slide in 2015 and 2020.

This dichotomy makes it difficult to classify Nigeria’s economic development in the business cycle. For example, do you think that the emergence of COVID-19 disrupted the growth path following the 2016 recession and that the economy is now back on track to its long-term average growth? Or that the 2015 oil crash signaled regime change and pre-2015 growth rates are no longer viable in the medium term, making a growth range of 2.0% to 2.8% the new normal?

Consistent with the latter, we expect structural stresses to limit growth in the short to medium term, with the country’s unconventional FX market management being the clearest example of these impasses. These concerns are likely to continue to irk foreign investors given the growing burden of subsidies and reserve imports.

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