Moody’s, one of the big-three credit rating agencies in the world spoken up about the current economic recession affecting Nigeria.
It predicted a further plunge in Nigeria’s economic strength, predicting that the declining value of the naira would engender a marginal increase in Nigeria’s external debt to 5.2 per cent of Gross Domestic Product, GDP, by end of 2016 from 3.3 per cent in 2015.
Moody’s also predicted that the economy would get out of recession in 2017.
While Nigeria’s government should comfortably meet its financing gap over the next 12 to 18 months, Moody’s Investors Service report published on Friday says increasing liquidity pressures, rising inflation and stagnant growth pose key challenges.
“The Government of Nigeria (B1 stable) continues to face low oil prices, volatile oil production, a spike in inflation that has eroded purchasing power, foreign exchange scarcity and an economy that has entered technical recession.
“Moody’s projects stagnation in real GDP in 2016, stating that the country will get out of recession in 2017, with a “subdued growth at 2.5% in 2017,” the report read.
“We expect that Nigeria will contain pressures on its public finances in the short term. However, there is greater doubt about the severity of the impact of these challenges, particularly on government liquidity and economic growth, over the medium term,” added Aurelien Mali, a VP-Senior credit officer at Moody’s.