Nigeria to become 30th largest economy by 2014
Most governments overhaul GDP calculations every few years to reflect changes in output and consumption, such as mobile phones and internet usage, but Nigeria has not done so since 1990, suggesting that the previous GDP framework underestimated economic activities.
When Ghana’s GDP was rebased in 2010, the size of its economy was found to be 60 percent bigger than previously recorded, $31 billion, compared to $18 billion. Nigeria ’s current nominal GDP for 2011 is $247 billion, according to data from the International Monetary Fund (IMF), and a similar 60 percent rise would bring it to $395.2 billion, making it the 30th largest economy in the world, as at the end of 2011, just behind South Africa ($422 billion), Austria ($425 billion) and Argentina ($435 billion).
The rebasing would also entrench Nigeria’s position as the second largest economy in Africa, making it likely to surpass South Africa as early as 2014.
Yvonne Mhango, analyst at Renaissance Capital (Rencap), said: “If Nigeria ’s GDP is upwardly revised by the same magnitude as Ghana ’s was in 2010, 60 percent, then we can expect Nigeria ’s economy to surpass the size of the sedately growing South African economy, as soon as 2014.”
Yvonne Mhango also notes in her research release that a bigger GDP would take Nigeria ’s consolidated tax revenues as a percentage of GDP down to 17 – 22 percent from its current level of 25 percent and lower than the average for sub-Sahara Africa , implying room for improvement.
Other macro-economic ratios will be affected too. On the positive side, Mhango predicts that Nigeria ’s public debt to GDP ratio – already lower than most countries in sub-Sahara Africa – will fall to 10.5-14.5 percent, from 17.3 percent at the end of 2011.
Samir Gadio, emerging markets strategist at Standard Bank, London, also informs in a note to BusinessDay, “Obviously, we can only speculate at this stage on the magnitude of the upward revision in Nigeria’s output and whether the other shortcomings in the existing GDP estimates will be addressed, the implication of the rebasing is that GDP per capita will subsequently increase, making Nigeria a more attractive investment case and potentially boosting consumer stocks.”
That said, Nigeria’s GDP per capita currently at $1,615 still trails those of many other economies on the African continent and while the rebasing would be an overall positive, it could also lead to lower economic ratios.
Samir Gadio explains further, that on the fiscal side, the revenue-to-GDP ratio will decline, but so will the overall fiscal position of the government.
Continuing, he said, the current account surplus will also decrease, which may not be positively perceived by offshore accounts looking at the country’s external dynamics, especially as the current account balance has already been substantially downsized in recent years in the official data, due to an unexplained increase in imports.
The new GDP figure is expected any moment from now. Yemi Kale, Statistician- General, National Bureau of Statistics (NBS), said in an interview in January, “We are still working on it. Unfortunately there was a lot of work that should have been done during the period of the fuel subsidy strike, so we have been set back by a couple of weeks. We are still hoping that we might be able to complete this before the end of the quarter, I was hoping to release this number by the last week in January”.
Source: Businessday
