By Randy Fabi
ABUJA (Reuters) - Nigeria's economy is set to grow 6.3 percent this year and consumer inflation should stay in double-digits through 2011 as the government slashes fuel subsidies and increases budgetary spending, a Reuters poll showed on Thursday.
A poll of 11 analysts forecast Nigerian inflation to average 12.6 percent in 2010 and 11.5 percent next year.
That marks an acceleration since a previous poll in January, which forecast 11.4 percent inflation this year but did not forecast inflation next year.
The National Bureau of Statistics last week estimated March inflation at 11.8 percent.
"Inflation will be sustained at a high level as the effect of fuel price deregulation and expansionary fiscal policy becomes apparent," said Alan Cameron, analyst for London-based Business Monitor International.
The poll forecast sub-Saharan Africa's No. 2 economy to grow 6.3 percent this year, down slightly from 6.7 percent last year and compared with a forecast for 6.4 percent growth in a previous poll in January.
Analysts expected the budget's fiscal deficit to grow by 3.5 percent this year, according to the poll, below government expectations of more than 5 percent.
Central Bank Governor Lamido Sanusi warned last week that double-digit inflation was a threat, but his top priority remained stimulating economic growth and getting credit flowing in Africa's biggest energy producer.
The central bank last week forecast GDP growth to average 7.5 percent in 2010.
"Nigeria's balance sheet remains strong," said Thalma Corbett, chief economist at NKC Independent. "Continued strong growth in the services and agriculture sectors will boost economic growth, as will oil output expansion".
FUEL DEREGULATION
Sanusi has backed federal efforts to deregulate the fuel sector, saying it may cause a brief spike in inflation but the economy would benefit in the long run.
Despite vying with Angola as Africa's top oil producer, Nigeria imports some 85 percent of its fuel needs because of the disrepair and mismanagement of its four state-owned refineries.
Fuel subsidies cost the government more than $4 billion a year.
Analysts said increased government spending this year would also contribute to double-digit inflation.
Acting President Goodluck Jonathan is expected to sign into law this week a 4.608 trillion naira budget, which lawmakers hope will help Nigeria out of a downturn.
The poll's forecast that the fiscal deficit would grow 3.5 percent this year, below government expectations of more than 5 percent, was based on weaker-than-expected capital spending projections.
"We see the fiscal deficit coming in below official expectations given that the capital expenditure component of the budget is unlikely to be fully implemented," Cameron said.
More than a third of this year's budget is for capital spending on areas including infrastructure, the power sector and development in the oil-rich Niger Delta.
Reuters Africa
