By Naomi Uzor
The Lagos Chamber of Commerce and Industry, LCCI, yesterday said the Nigerian economy remained fragile with the high dependence on oil sector for revenue and foreign exchange earnings.
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It said that, although oil revenues increased with recovering oil prices in 2018, the impact on the economy was subdued by the huge foreign exchange commitments to petroleum product importations while the inherent subsidy and the high debt service obligations were also major constraints to the growth of the economy.
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In a statement by the Director General of LCCI, Mr. Muda Yusuf, he said with the limited progress in the ongoing effort to diversify government revenue sources, the performance of the oil and gas sector would remain a critical factor that would shape the outlook for the economy in 2019.
According to estimates by Capital Economics analysts, every $10-per-barrel fall in oil prices will cause a 3-5 per cent decline of GDP in most of the Gulf economies, and a slowdown of 1.5-2 per cent of GDP in Russia and Nigeria on an annualized basis. The outlook will therefore depend to a large extent on developments in the oil and gas sector and the political will to undertake far reaching reforms, beginning with the oil and gas sector.
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He explained that “given the challenging economic conditions, key policy reforms would be imperative to support and sustain macroeconomic stability.
These include, among others, a foreign exchange management framework that reflects the market fundamentals, the acceleration of the economic diversification agenda, normalization of Lagos ports environment, the oil and gas sector reform, especially the petroleum industry bill; reduction in the cost of governance at all levels; improvements in the domestic revenue (particularly independent revenue) to reduce volatilities of government revenues, among others”. On the issue of export, he said exporters suffered huge losses as a result of the Apapa gridlock.