Despite rise in oil price Nigeria still faces bleak economic future –Fitch

Nigeria may not exit its current economic recession soon if it is depending solely on the current rise in the price of crude oil, this is according to an international rating agency, Fitch.

Fitch in its latest assessment of oil sector contributions to economies of oil producing countries in the Middle East, Europe and Africa, said Nigeria would only exit recession fully and be in a right financial reckoning to tackle most of its challenges, only if oil price in the international market could jump from its current price of about $52 to $139 per barrel.

In the report, the international rating outfit states: “Despite the fact that price of crude has been in constant rise since the first quarter of 2017, some countries would not be in a position to provide the needed economic muscle for growth , until the price jumps more than twice its current price.”

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It gave example of countries under reference to include Nigeria and Kuwait having such critical condition that would need more than the current trends in the international oil market to survive their present economic meltdown.

Fitch sounded more pessimistic when it said that even if the affected countries embarked on recommended currency devaluations and removal of subsidies from their public service structure, chances were that they would not witness balanced budgets in the nearest future.

However, its reference to Saudi Arabia as a country to face a possible economic meltdown in 2017, surprised pundits, most of who had rated that country as one of the most viable in the Middle East and among the 13-member countries of the Oil Producing and Exporting Countries (OPEC)..

Said Mr. Malakai Ukpong, an expert in OPEC matters: “To some of us that is no news, because we had earlier maintained that, if Nigeria failed to diversify its economy, using the recession challenges, it would never get it right again.

“With the deficits trailing all its budget in the past two years, all running into trillions of naira, how on earth can the oil sector with its shaky nature be relied on, solely , for a solution?” he asked.

 

 

 

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