OPEC projects Nigeria’s economy recovery in coming months

The Organisation of the Petroleum Exporting Countries has said, although Nigeria’s economy faced challenges in the first half of the year, it may recover in the coming months.

The group in its latest report on the Monthly Oil Market Report for May said the recovery would be hinged on Nigeria’s Purchasing Manager Index for April, which recovered strongly to 53.8 compared with only 42.3 in March.

“Despite the challenges, April’s Stanbic IBTC Bank Nigeria PMI recovered strongly to 53.8, compared with only 42.3 in March, indicating a potential near-term recovery,” it stated.

The report further explained part of the challenges faced by Nigeria’s economy in May, saying that business activities and consumers’ purchasing power remained low, in addition to high input-cost inflation and lower employment levels compared with 2022.

“Nigeria’s economy faced challenges in gaining momentum in 1H23, with business activity and consumer spending remaining subdued, in addition to high input-cost inflation and lower employment levels compared with the previous year,” the report further indicated.

According to the report, the country’s inflation data for March showed an ongoing acceleration, with an annual rate of 22 per cent year-on-year, up from 21.9 per cent year-on-year in February and 21.8 per cent in January.

OPEC said food inflation had been a key factor in the rise, reaching about 25 per cent year-on-year in March, adding that the Central Bank of Nigeria had kept the policy rate unchanged at 18 per cent, following a 50 basis points hike in March and a 100 basis points hike in January.

The group, however, said despite the challenges, Nigeria’s PMI recovered strongly to 53.8, compared with only 42.3 in March, indicating a potential near-term recovery.

The development comes on the heels of recent removal of fuel subsidies, which had cost the country a whopping N12tn.

President Bola Tinubu’s inaugural speech which announced the end of the petrol subsidy regime immediately sent prices of petrol skyrocketing from between N179 and N200 per litre to above N500 per litre.