Written by: Lukman Otunuga, FXTM Research Analyst
There are
higher expectations for Nigeria’s economic recovery after the fastest growth
since 2015 was recorded during the fourth quarter of last year. As the nation
draws further away from the worst effects of the recession, several important
economic benchmarks show further signs of improving economic stability. Yearly
Gross Domestic Product (GDP) for 2019 is heading steadily towards a range of
2–2.3 percent compared to 1.93 percent in 2018. In addition, Purchasing Power
Parity (PPP) and GDP per capita appear stronger.
On the
downside, real GDP growth is underperforming on average compared to other
emerging economies, possibly due to the lingering effects of global Oil price
volatility and weaker growth in the manufacturing sector.
In spite of
the headwinds, Nigeria has the potential to grow in 2019 on the back of stabilizing
Oil prices. There is new impetus to diversify away from Oil reliance and the
chance to focus on economic rebuilding. Inflationary pressures are cooling off
after reaching intense heights this time last year.
In February
2019, inflation declined to 11.3 percent which - when compared to the level of
13.3 percent in March 2018 – is a more encouraging position. If the downward
trajectory continues and inflationary spikes are avoided, prices could
stabilize further. Boosting the manufacturing sector could contribute to jobs
creation and reduce unemployment which is currently high at around 23 percent.
A focus on creating jobs in the manufacturing and services sectors would tap
into the massive potential in the labour market, adding to GDP growth in the
long term.
Stabilising
Nigeria’s Oil-and-Gas sector is critical to continued growth because it
accounts for around 10 percent of GDP and an estimated 83 percent of exports.
There are signs of stability and improvement in the areas of foreign
investment, foreign currency reserves and monetary policy. The Central Bank of
Nigeria unexpectedly cut interest rates in March to 13.5% from 14% in an effort
to stimulate economic growth.
The latest
reports show increased investment in sovereign bonds, likely due to the pause
on interest rates in the US increasing attraction towards emerging economies
and their investment opportunities. Foreign reserves are at the healthy level
of 44 billion USD at the time of writing.
While
internal economic conditions are seen improving, external risks could impact on
Nigeria’s growth. Global trade developments, China’s slowdown and the effect on
global growth may all present headwinds. Brexit uncertainties and developments
are also a factor given the level of foreign direct investment from Britain and
the weaker Pound Sterling. On the plus side, a vulnerable Dollar and dovish
Federal Reserve could be good news for the Naira as investors search for higher
yielding instruments versus the USD.
Have you heard this? Many Nigerian exporters have been defrauded of huge amount of money in the process of exporting commodities to foreign countries. Do you know why? They were not trained on export operations, management, documentations and the best methods of payment in export trade. This is terrible!!! Nigerians cannot continue to lose money to foreigners in the course of export business. Exporters, why don’t you get a practical manual that teaches the stages of export trade from processing and packaging of commodities to receipt of payment by the foreign buyers. It teaches export operations, export management, export documentations and methods of payment in export trade? It is a contemporary step-by-step guide to export trade. It tells all the contemporary dynamics in export trade. To get it, click on the link below:
http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
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