By Yinka Ajayi
USB Afrrica has expressed optimism that Nigeria will exit economic recession this year.
In a statement, Michael Bolliger, Head of Emerging Market Asset Allocation at UBS Wealth Management’s Chief Investment Office (CIO) on Africa sovereign credit prospect, said :“We expect Nigeria, Africa’s largest economy, to recover from recession this year although it is unlikely that growth rates will return to previous heights. A determining factor for the country’s growth outlook will be a successful continuation of the Naira’s exchange rate liberalization.”
Ali Janoudi, Head of Africa UBS Chief Investment Office (CIO) on sovereign credit prospects said: “The report indicates that the price recovery over the past 18 months has supported the growth potential of many African economies, especially Nigeria and more optimistic outlook for sub-Saharan Africa should also affect Nigeria’s economy going forward as the region embarks on a new phase of development.
Janoudi added:”Africa has been hit by a range of issues in recent years like the commodity super cycle, depreciating exchange rates and mounting public debt ratios. Energy exporters, such as Nigeria, wee particularly affected. Nigeria, Africa’s largest economy, has seen several credit rating downgrades in recent quarters, but the recent recovery in energy prices and the potential for further moderate upside should bode well for the sovereign’s creditworthy.”
The report however revealed that macroeconomic prospects have improved. As the International Monetary Fund (IMF) forecasts real GDP growth to almost double this year in Sub-Saharan Africa, reaching 2.6 percent, while fiscal and current account deficits are expected to have peaked at 4.5 percent and 4 percent last year, respectively. Key drivers supporting the outlook include rising global growth and trade, a modest recovery in energy and base metal prices, more competitive exchange rates for African currencies, and structural reforms in a range of countries.