Nigeria’s medium term economic outlook will be significantly affected by energy sector disruption. Escalating political violence in the Niger Delta has contributed to a 40% decline in oil production to 1.4m bpd, the lowest for nearly thirty years.
Given that the oil sector contributes just under half of total state
revenues, this will seriously undermine President Buhari’s plans to revive the economy in 2016. On 09 June 2016, the World Bank cut Nigeria’s GDP growth forecast for 2016 to 0.8%, down from its January 2016 estimate of 4.6%. In the long term, the uncertainty associated with the government’s planned transition to a less oil-dependent budget will elevate sovereign credit risk, particularly in light of its current economic woes.