Nigeria’s Bureau of Statistics has cut down the economic growth rate for 2015, from an earlier estimated 6.75 percent to 5.54 percent. The statistics office said the government trimmed expenditure because of the massive fall in oil revenue caused by the slump in global oil prices.

“Outlook for the economy in 2015 and beyond is even more complicated, in light of declines in crude oil prices,” the NBS said. “In addition to declining crude prices, the Nigerian economy is faced with other headwinds … the supply gap in the foreign exchange market is likely to increase as the demand for dollars outpaces supplies, putting pressure on the naira.” The body added that it expects growth from 2015 through to 2017 to average 5.7 percent because of the ongoing reforms to boost the contribution of the non-oil sector and investments in power and infrastructure.

Nigeria is Africa’s largest economy and tope exporter of oil, but its dependency on the commodity, which contributes about about 80 percent of government spending, means the country will go through a very tough time this year because of the 60 percent drop in price since June last year and steady decline in crude production. According to the NBS, production stood at 2.26 million barrels a day in the first quarter of last year and 2.15 million barrels per day by the third quarter.

Nigeria lowered its 2015 spending plan to 4.3 trillion naira ($23 billion) in November after it cut its oil benchmark price to $65 a barrel, down from $77.5 in the 2014 budget. In the same month, the Central Bank devalued the currency by 8 percent in a bid to halt the decline in its foreign exchange reserves. Despite the devaluation, the naira has hit record lows against the dollar since this year, closing at 189.10 to the dollar on Thursday. The statistics office said the devaluation will cause a rise in inflation, from an estimated 8.0 percent last year to 8.78 percent for 2015, but this is below the double digit inflation that was earlier feared. However, the NBS said the devaluation would favour non-oil exports, even though it feared that imports could slow as goods become more expensive.
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