Vetiva Research, a Lagos-based research firm, has predicted that the Nigerian economy will rebound by 3.1 per cent in 2021.
The firm in its second half 2021 macroeconomic outlook for the Nigerian economy, however, said recovery was dependent on availability of vaccines.
The analysts reviewed the COVID-19 virus and vaccine developments, the global recovery trajectory, and the build-up in global inflation in the report.
Vetiva’s Economist, Ibukun Omoyeni, projected a tussle between forex pressures and high base effects in the second half of the year.
While base effects are expected to influence a moderation in inflation, the economist noted an average inflation expectation of 17.34 per cent for 2021.
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Amid the moderation in inflation, Omoyeni predicted that the CBN would maintain MPR at 11.5 per cent.
“Given the transition to a post-pandemic environment, we do not see scope for rate hikes in 2021, as investors are more concerned with FX unification efforts and the CBN with economic recovery,” he said.
On the fiscal sector, Vetiva’s economist noted that the resurfacing of subsidies could result in a higher fiscal deficit.
Vetiva report noted that, “only two states and the Federal Capital Territory generated 50 per cent of its revenue internally…this poses a major medium-term risk should there be an earlier-than-anticipated shift to cleaner forms of energy, especially as global warming remains a hot topic in global parlance.”
