New Report Available: Nigeria Business Forecast Report Q2 2013

Recently published research from Business Monitor International, "Nigeria Business Forecast Report Q2 2013", is now available at Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 19 February 2013

Core Views - Governance is improving along several fronts, with serious reformers in President Goodluck Jonathan's administration leading to improved management of oil funds and the prioritisation of capital spending. However, entrenched interests will keep progress slow and security concerns may derail some reforms.

Growth will be below trend in 2013 due to the ongoing effects of the floods, global macroeconomic headwinds, disruptive violence in some northern states, and an uptick in oil theft which may hamper crude production.

Major Forecast Changes

We have downwardly adjusted our real GDP forecasts for 2013 due to our reassessment of the risks described above, and we now expect the economy to expand by 6.8%, compared with our previous projection of 7.1%.

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Incorporating new data provided by the Central Bank of Nigeria and based on our expectation for an uptick in imports, we have also downgraded our estimates for the current account surplus in 2013, from 7.5% of GDP to 7.2%.

Key Risks To Outlook

The volatility in the price of oil poses a significant risk to export revenues and government receipts. A significant deterioration in the economies of Europe, the US, or other major markets could see the price again head lower, with negative implications for Nigeria's economy.

While we believe that security risks will eventually be contained, if the situation significantly deteriorates, this would potentially adversely affect investment, exports and growth.

Partial Table of Contents:

Executive Summary

Core Views

Major Forecast Changes

Key Risks To Outlook

Chapter 1: Political Outlook

SWOT Analysis

BMI Political Risk Ratings

Domestic Politics

Political Risk Still At The Fore

- Nigerian political risks, including corruption and security, will continue to weigh heavily on the sentiment of investors and other stakeholders for the foreseeable future. While there has been some measurable progress, particularly in terms of improved governance, violence and unrest, largely in the northern states, continues to plague the country.

Long-Term Political Outlook

'Failed State' Or African Powerhouse?

- Following elections in April 2011 Nigeria is facing a number of challenges over the coming decade. This poll were largely successful, giving the country an opportunity to exorcise the embarrassing experience of 2007 when elections were riddled with what the EU described as 'rampant vote rigging, violence, theft of ballot boxes and intimidation', and claim Nigeria's place as a regional leader and economic powerhouse. The country will need to press ahead with ambitious economic and business environment reforms and develop a plan to address the root causes of violence in the Niger Delta and the Middle Belt.

TABLE: POLITICAL OVERVIEW

Chapter 2: Economic Outlook

SWOT Analysis

BMI Economic Risk Ratings

Economic Activity

Growth Headwinds To Persist Into 2013

- Nigerian growth will continue to be constrained by the headwinds which characterised much of 2012, including security concerns and the lingering effects of widespread flooding, into 2013. Nevertheless, the economy will still grow rapidly by global standards, at a forecast 6.8% in 2013, compared to our 2012 estimate of 6.6%.

TABLE: ECONOMIC ACTIVITY

Fiscal Policy

2013 Budget: A Step In The Right Direction, In Theory

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