Analysts at Renaissance Capital have predicted that Nigeria's Gross Domestic Product (GDP) will grow by 2 per cent in 2018.
Renaissance Capital stated this in a report titled: "Nigeria: 3Q17 GDP- Uneven growth recovery," obtained tuesday.
Nigeria's growth strengthened to 1.4 per cent year-on-year in third quarter 2017, compared with -2.3 per cent year-on-year recorded in the third quarter of 2016.
But the Renaissance Capital expressedconcern that the non-oil sector's growth slipped back into negative territory of -0.8per cent year-on-year, versus zero growth a year earlier, despite agriculture's consistent growth.
"Uneven growth explains why Nigeria's growth recovery is fragile. We maintain our 0.7 per cent growth forecast for 2017, and expect capital expenditure and a pick-up in demand to help lift growth to two per cent in 2018. The lopsidedness of the recovery implies downside risk to growth.
"Oil sector is (almost) single-handedly driving the recovery. This rebound in production followed the repair of pipelines in the second quarter of 2017, which led to more than 200k b/d of crude oil production coming back on stream, and the conclusion of an amnesty programme for Niger Delta militants, which resulted in the cessation of attacks on oil facilities," it added.
It stressed that Nigeria's recovery is largely driven by the oil sector, stating that outside agriculture, the remaining two-thirds of the economy is sluggish.
"The downside risks to 2018 growth will increase in the run-up to the February 2019 elections. "Typically, economic activity slows in the months leading to the polls, particularly as the private sector adopts a wait-and-see approach because of uncertainty regarding policy continuity.
"Nigeria's electoral history also shows that troublemakers tend to stoke tensions in sensitive regions, such as north-eastern Nigeria and the Niger Delta, for political ends.
"Instability in the latter region could have material implications on oil production, and by implication, GDP growth," it added.