The collapse in crude oil prices , coupled with the COVID- 19 pandemic, is expected to “ plunge the Nigerian economy into a severe recession, the worst since the 1980 s ” , the World Bank said on Thursday.
The World Bank , in a new report, titled ‘ Nigeria in times of COVID- 19: Laying foundations for a strong recovery ,’ estimated that Nigeria’ s economy would likely contract by 3.2 per cent this year.
“ This projection assumes that the spread of COVID- 19 in Nigeria is contained by the third quarter of 2020, ” it said .
The bank said if the spread of the virus became more severe, the economy could contract further .
It said , “ Before COVID -19 , the Nigerian economy was expected to grow by 2. 1 per cent in 2020, which means that the pandemic has led to a reduction in growth by more than five percentage points.
“ The macroeconomic impact of the COVID- 19 pandemic will likely be significant, even if Nigeria manages to contain the spread of the virus . Oil represents more than 80 per cent of Nigeria’s exports, 30 per cent of its banking -sector credit , and 50 per cent of the overall government revenue . ”
According to the report, with the drop in oil prices , government revenues are expected to fall from an already low eight per cent of GDP in 2019 to a projected five per cent in 2020.
The Country Director for Nigeria, World Bank , Shubham Chaudhuri, said , “ While the long- term economic impact of the global pandemic is uncertain, the effectiveness of the government ’ s response is important to determine the speed , quality , and sustainability of Nigeria’ s economic recovery.
“ Besides immediate efforts to contain the spread of COVID- 19 and stimulate the economy , it will be even more urgent to address bottlenecks that hinder the productivity of the economy and job creation . ”