*Forecasts 5.5% growth rate, 8.8% inflation in 2015
James Emejo in Abuja

The National Bureau of Statistic (NBS) has said contrary to widespread speculations that increased pressures on prices could result from the election period, inflation could actually be caused by the recent depreciation of the Naira.

It said a review of historical time series in the current democratic dispensation showed little evidence that inflation could be influenced, to a large extent by election activities.

The NBS, in its 2014 Economic Review and 2015-2017 Outlook also said it expected the Nigerian economy to grow by 5.5 percent in 2015 helped by the non-oil sector, which is expected to drive growth.

It added that growth is expected to average 5.7 per cent in 2015 through 2017.

The statistical agency also projected inflation at 8.8 per cent in 2015 and expects it to remain moderately stable averaging 8.13 per cent over the 2015 to 2017 period.

The NBS said the impact of declining crude oil prices was likely to result in a decline in the value of oil exports, over the forecasted period, although exports are expected to be positive in the near term.

It said: “The crude oil price shocks, the resulting declining government expenditure and its multiplier effects are likely to impact businesses as well. Nevertheless, prioritisation of infrastructure such as roads and power are likely to mean that while growth may slow, it is likely to be stable. While growth is expected to peak at 6.79 per cent in 2014, the economy is expected to grow by 5.5 per cent in 2015, as the non-oil sector of the economy is expected to drive growth. Over the 2015 through 2017 period, growth is expected to average 5.7 per cent.”

It said: “Some have speculated that there are likely to be increased pressures on prices as a result of the election period, a review of the historical time series in the current democratic dispensation reveals that this is unlikely to be the case. In the previous four elections of; 1999, 2003, 2007 and 2011, only one election year actually had an increase in the inflation index. Lagged effects may however exist as the headline index was higher the year after the election in all cases.

“Nevertheless, upward pressure on inflation rates are likely to be caused by the recent depreciation of the Naira. While inflation is projected to rise to rise to 8.8 percent in 2015, it is expected to remain moderately stable averaging 8.13 percent over the 2015 to 2017 period.”

Continuing, it stated: “We predict that the source of the upward pressure is likely to come from the devaluation of the Naira, which occurred in November 2014. The impact of the depreciation is likely to be in the first half of 2015; prices are likely to stabilize by the end of the year as a result of administrative measures by the CBN, in addition to ample food supplies when the harvest kicks in early in the second half of the year. In light of the aforementioned, the CPI is projected to rise to 8.78 percent in 2015, and average 8.13 percent over the 2015 to 2017 period.”

According to the forecast: “Although the decline in crude oil prices may weigh on the value of oil exports, the recent depreciation of the local currency is expected to bode well for non-oil exports. The depreciation also means that imports are likely to be more expensive and are likely to slow going forward. The value of Total Trade is projected to increase by 9.66 percent in 2015, and average 5.05 percent over the forecast period.”

It added: “The recent depreciation of the Nigerian Naira is expected to result in cheaper prices of non-oil exports, resulting in a boost. Finally, the recent depreciation is expected to weigh on imports as while imports may grow, they are likely to grow at a slower rate compared to historical value.”