With the crude oil price jumping to levels not seen in more than seven years, the Federal Government has been urged to work towards achieving its 4 per cent growth projection for the economy this year, 2022.
According to a Senior Research Analyst at FXTM, Mr Lukman Otunuga, the oil price windfall is “a welcome development for the country to beat the 2022 growth projections of Brentwood institutions for the country. The World Bank has projected that Nigeria’s economy would expand 2.5 per cent in 2022 while the International Monetary Fund (IMF) is slightly more optimistic, forecasting 2.7 per cent. These projections are below the 4 per cent expected by the Federal Government.
“The country remains heavily reliant on oil which accounts for over 90 per cent of export earnings and 70 per cent of government earnings. Rising oil price could cushion some of the damage created from the other negative themes weighing on the country but the question remains for how long?
“The burning question is whether Nigeria will be able to hit that 4 per cent target or experience growth closer to what the World Bank and IMF “, Otunuga asked in statement made available to the press.
He added: “Year 2022 will be a critical year for economies across the globe as they navigate through inflation and COVID-19 invested waters.
“As major central banks across the globe tighten monetary policy, this may have ramifications on global and emerging markets. Although COVID-19 cases across the world continue to rise, many major economies remain on a fragile road to economic recovery.
For Nigeria, the economy is enjoying a period of easing inflationary pressures with the latest figures rising 15.63 per cent in December after eight straight months of decline.
Ultimately, Africa’s largest economy still remains exposed to the same external and domestic risks. Externally, oil price volatility, developments revolving around Covid-19, China’s economic growth and tightening financial conditions among other factors.
“Domestically, high unemployment, fragile business environment, shaky macroeconomic conditions, dollar scarcity and uncertainty ahead of the 2023 general elections could threaten growth.