Hope rises for recovery from economic recession in 2017
But companies operating in the country are worried that struggling economy, corruption, volatility and political risks as well as violence may jeopardise business development.
BMI’s latest report revealed that negative investor sentiment and delays on government-supported infrastructure would keep real Gross Domestic Product (GDP) growth far from pre-2014 levels.
However, experts at the 6th Annual Allianz Risk Barometer in Lagos, on Wednesday, noted that growing concerns, including digital dilemmas arising from new technologies and cyber risks as well as government policies may not enable businesses to thrive.
While macroeconomic situation is expected to improve should the country exit the economic slump, projected risks could create loss in GDP, as organisations need to invest more resources into better monitoring politics and policymaking.
“We see little prospect of the NGN6.7trillion budget shown to parliament by President Muhammadu Buhari in October, being realised in 2017, despite the deficit likely to remain quite wide, at 2.7 per cent of GDP,” BMI said.
It however noted that Nigeria’s current account deficit will be equivalent to 4.2 per cent of GDP in 2017, marking an improvement on the 6.2 per cent projected in 2016.
“This will be driven by a pick-up in the oil sector, both in terms of global prices and production. Nevertheless, this is still far from the surpluses recorded over the decade to 2013, which averaged 9.3 per cent of GDP.
“We expect that pressure on the naira will be much reduced in 2017 following a projected devaluation to N350 per dollar, but the weak inward flows of foreign capital will continue to exert downward pressure on the currency, albeit to a far lesser degree than seen in 201,” the report said.
The President, Risk Managers Society of Nigeria (RIMSON), Jacob Adeosun, who described the Barometer as a worthy compass, telescope and guide, urged managers, investors, professionals, governments, policymakers and corporate entities not to ignore it in their strategic decisions in 2017.
Speaking, the Chief Executive Officer, Allianz Global Corporate & Specialty (AGCS), Africa, Delphine Maïdou, noted that: “Nigeria faces macroeconomic challenges including low commodity prices, the Chinese slowdown and the tightening of U.S. monetary policy. It also suffers its own internal pressures such as inflation, weak domestic demand and socio-political tensions. The country’s growth is held back by weaker macroeconomic environment, the struggling financial sector, underdeveloped infrastructure, insufficient health and education.”