Nigerians should expect further GDP contraction — Cordros Capital

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Analysts at Cordros Capital, a Lagos based investment banking firm, said that the economic impact would likely be more severe if the unrest and curfew persist beyond the month of October and estimated that Nigeria’s economic output would contract by 6.91percent year-on-year (y/y) in Q4’20 as a result, translating to negative growth of 4.15 percent y/y by the end of the year.

Giving detailed breakdown of the expected impact, they said: “The transportation, trade, and manufacturing sectors are expected to be the hardest hit.

On transportation, we expect reduced domestic and international flight operations pending when normalcy is restored.

“Similarly, we expect compliance with curfew directives to hinder the free movement of people and goods across the country, further compounding the woes of the transport sector, which is yet to recover from the COVID-19 induced decline.

“While the manufacturing sector is currently being hampered by FX related issues and an unfriendly business environment, the imposition of curfews will further exacerbate the challenges of the sector.

For the trade sector, the decline in household consumption brought about by higher food prices and shrinking consumers’ income will cascade into weak wholesale and retail trade in conjunction with the pre-existing supply chain constraints.”

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