Moody’s Projects Inflation to Rise To 18% By December

Moody's

Moody’s global rating agency has raised concerns over Nigeria’s Forex scarcity in the midst of rising inflation that might increase further.

In a note monitored via the Thomson Reuters Eikon, Moody’s noted that it projects stagnation in real GDP in 2016 and only subdued growth at 2.5% in 2017 “We expect that Nigeria will contain pressures on its public finances in the short term” the statement said.

The agency noted that there is a greater doubt about severity of impact of challenges, particularly on government liquidity and economic growth, over medium term.

It also projects inflation to “to accelerate to 18% by year’s end, before falling to an average of 12.5% in 2017. Moody’s said it views the recent devaluation of the Naira as credit positive.

However the the depreciation will increase Nigeria’s external debt marginally to 5.2% of GDP by end-2016 from 3.3% in 2015

As a cautionary note, Moody’s says it expects fiscal outlook to remain in deficit at around 3.7% of GDP in 2016, after posting a 3.8% deficit in 2015.

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