PwC MSME Survey 2020

Overview of the Nigerian Economy Andrew S. Nevin Partner & Chief Economist PwC Nigeria == C Nigeria's output growth was expected to be on a recovery path prior to COVID-19. PwC estimated the country's GDP growth to reach 2.6% in 2020 from 2.3% in 2019. With the global pandemic impacting the world's economic trajectory, Nigeria is expected to experience a reversal of its recovery path and re-enter a recession this year. As a result of the lockdown measures and restrictions to travel, movement and activities in key parts of the country, and across the globe, the IMF projects that Nigeria's economy will contract to -3.4% by the end of 2020. The country's economy is projected to recover to 2.4% by 2021. Meanwhile, in March 2020, Saudi Arabia's call for a production cut with non-OPEC countries led by Russia, ended in a deadlock. Consequently, this deadlock led to a supply glut of oil. This glut coupled with the coronavirus' impact on global industrial activities, led to declined demand for crude oil, which in turn contributed to a drop in international oil prices to less than USUSD40 per barrel. Though the deadlock has ended with the OPEC and non- OPEC bloc of countries agreeing to production cuts, as at May 31, 2020, the OPEC daily basket price stood at approximately US$36.55 per barrel. Nigeria's economy is highly susceptible to activities in the global oil market, as the country relies on proceeds from oil sales for fiscal planning, as well as forex supply for imports of inputs. The effect of COVID-19 and other economic issues have consequent impact on the business environment. Subsequently, businesses that are able to withstand the economic headwinds are those that have built mechanisms and designed internal strategies to weather the storms that occur in the global and local economic spheres. PwC MSME Survey 2020 PwC June 2020 14

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