Nigeria’s Economy on Track to Hit $400bn by 2026
Bismarck Rewane, the managing director of Financial Derivatives Company has forecast Nigeria’s gross domestic product (GDP) to hit $400 billion by 2026, making it the second largest in Sub-Saharan Africa.
Rewane revealed this at the Access Bank Customer Forum held in Lagos on Thursday, projecting the country’s GDP to grow by 3.52 per cent through the next two years.
“The Nigerian economy will grow at 3.5 percent (approximately $400bn). Nigeria is on track to becoming the second-largest economy in sub-Saharan Africa,” Rewane said.
He added that the country’s foreign exchange auction system would become more efficient, with unencumbered foreign reserves soaring to $20 billion.
The renowned economist expressed optimism on Nigeria’s inflation outlook, projecting that consumer prices to decelerate to 22 per cent in two years while the key interest rate slows to 20 per cent within the period under review.
The decline in borrowing rates will reduce the level of bad loans recorded across the banking sector, he explained.
Africa’s most populous nation is currently grappling with rising prices which has led to various social unrest and industrial action by labour unions.
Though headline inflation has slowed for the second consecutive month to 32.15 per cent in August 2024, the living conditions of the citizens have in no way got any better.
The continuous rise in inflationary trends has seen the monetary policymakers raise benchmark interest rates from 18.75 per cent in July 2023 to 26.75 per cent in August 2024.
With inflation dropping to a six-month low, the monetary policy committee in its meeting next week may likely adopt a “wait-and-see” approach, pausing rates after four consecutive hikes.
Naira to trade at 1,550/$
Despite the positive outlook for other key economic indicators, Rewane warned that the naira would likely trade at N1,550 to the dollar in the parallel market, citing intervention funds, diaspora remittances, and exchange rate policies as key factors in the exchange rate alignment.
The FDC chief credited those improvements to intervention funds, diaspora remittances, and policies focused on exchange rate adjustments.
“These gains are driven by intervention funds, remittances, and adjustments to exchange rate policies,” he noted.
Rewane added that total factor productivity would increase to 2.6 cents by 2026, up from 2.4 cents in 2024, while the country’s trade balance was expected to rise to $9.3 billion up from $8.42 billion.
Petrol to settle at N900/litre
The leading economist also predicted that petrol prices would “stabilise at N900 per litre due to increased production from Dangote refinery and modular refineries”.
He also projected that the stock market capitalisation would rise to N58 trillion, with the listing of big-cap companies like Dangote Refinery and Nigerian National Petroleum Corporation.
In terms of commodity prices, Rewane predicted that a basket of tomatoes would cost N20,000, a bag of rice would sell for N75,000, and a bag of beans would reach N110,000 by 2026.
The FDC boss emphasised that inflation remained a major challenge for Nigerian companies, affecting their operating margins.
