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Nigeria’s GDP shrinks 0.5 from 1.7 in 2016

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Nigeria’s economy has continued to slump and has contracted for a fifth consecutive quarter in the three months through March as oil output declined, a Bloomberg report indicate.

Gross domestic product in Africa’s most populous nation, Nigeria shrank 0.5 percent in the first quarter from a year earlier, compared with a revised 1.7 percent contraction in the final three months of 2016, the Abuja-based National Bureau of Statistics said in an emailed statement on Tuesday.

The median of eight economist estimates compiled by Bloomberg was for the economy to expand by 0.3 percent.

Economy took a hit after oil prices crashed in mid-2014, and militants from the crude producing Niger Delta region destroyed pipelines causing production to fall to an almost three-decade low.

That and power shortages weighed down output, causing the GDP to shrink a revised 1.6 percent in 2016, the first full-year contraction in a quarter of a century. Foreign-currency shortages fueled by falling oil exports caused inflation to accelerate every month for more than a year until January.

The oil industry contracted 11.6 percent from a year earlier, the statistics office said.

The International Monetary Fund forecasts the economy will grow by 0.8 percent this year and the World Bank predicts expansion of 1.2 percent. The President Muhammadu Buhari-led government said recovery will be driven by a rebound in output of oil, which accounts for two-thirds of its revenue, as well as increased state spending.

Also, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, Monday, vowed that he will ensure that Nigeria achieves self-sufficiency in crude oil refining in 2019, stating that he would resign if he fails to achieve the target.

Kachikwu declared that since assumption of office, the present administration had been able to improve the output of the refineries and that the refineries are currently undergoing refurbishment. He said, “Since coming we have been able to get them back to begin to produce 7 million litres versus zero.

That is not the 90 per cent template. We are now refurbishing the refineries.” Kachikwu further stated that he has delivered on every of his targets since coming into office and would not relent until all his targets are met. He said, “I have delivered on everything since I came to office. First, I took NNPC and moved them into a profit making organization; first time in history and reshaped the organization.

“I removed cash call deficit of over $6 billion, negotiated it. Everything that I have promised since coming into office, I have delivered. I will deliver on the refineries and I am committed to that and I will also deliver a future for oil that makes sense for Nigeria. “But bear in mind one has been there for one and half years, the president has been there for two years. I can’t pretend that we are going to solve in one day all the problems that happened in Nigeria in the past.” Kachikwu further stated that sustained engagement had been the missing component in the Niger Delta militants challenges, noting that the Acting President Yemi Osinbajo is currently leading efforts in addressing the challenges.

Also, the central bank, which will announce its decision on interest rates later on Tuesday, has moved to improve foreign-currency liquidity by allowing portfolio investors to trade dollars at market determined rates and removing a 197-199 naira peg. The regulator still intervenes to keep the official interbank rate at about 315 per dollar and continues to block importers of certain products from accessing hard currency on the official market.

Senate approved a 21 percent increase in 2017 spending plans to 7.4 trillion naira ($23.5 billion). The government plans to spend 30 percent of the budget to build roads, rail, ports and improve the power sector in order to stimulate business and create jobs. The office of Acting President Yemi Osinbajo said he will sign the budget into law as President Muhammadu Buhari is in the U.K. on a second medical trip since the beginning of the year to treat an undisclosed ailment.


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