Nigeria banks on oil to get 3.5% economic growth goal

Nigeria’s government insists the economy of Africa’s biggest crude producer is on track to expand by 3.5 percent this year due to increased oil revenue, even as growth missed expectations in the first quarter.

According to Bloomberg, growth in gross domestic product slowed to 1.95 percent in the three months through March due to weaker output from agriculture and other parts of the non-oil economy.

That was less than the 2.6 percent median estimate in a Bloomberg survey. The output of crude, which accounts for only about 10 percent of GDP but generates the bulk of government revenue, rose to 2 million barrels a day in the period, the most since the first quarter of 2016.

“There was a slowdown on seasonal effects, but what strikes you is that oil is big,” Adeyemi Dipeolu, a special economic adviser to President Muhammadu Buhari, said Wednesday in an interview in the capital, Abuja. “It gives you the means by which you can actually ramp up growth because you’re getting a bit more revenue, you’re getting a bit more forex,” he said.

The government’s projection exceeds that of the International Monetary Fund, which forecasts growth will accelerate to 2.1 percent this year from 0.8 percent in 2017.

Africa’s most-populous nation with some 200 million inhabitants wants to boost expansion after the economy contracted in 2016 for the first time in a quarter century as the price and output of oil plunged. Lawmakers on May 17 approved a 2018 budget of 9.1 trillion naira ($25 billion), the biggest yet, with money being earmarked for investments in roads, rail, ports and power.

Buhari, who still needs to sign off on these fiscal plans, is seeking re-election in February. That’s a further impetus for the government to increase spending and achieve growth targets.

The spending on capital projects will help spur growth, according to Dipeolu.

“Once the budget is passed, there will be economic activity just on the basis of implementation,” he said.

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