With economic
growth staging a fragile rebound and heavy hitters such as the IMF even
downgrading growth forecasts from 2.1% to 1.9%, some may feel Nigeria’s growth
prospects remain quite discouraging. Recent reports from the World Bank
predicting growth to hover slightly below 2% due to an underinvestment in human
capital is likely to rub salt into the wound. With the recent decline in Oil
prices negatively impacting government revenues and possible complications to
properly enact the 2019 budget, all signs point to tough times ahead.
However, the
fact that Nigeria remains on the path to diversifying away from Oil reliance
suggests there is still some light at the end of this dark tunnel. It must be
kept in mind that the largest economy in Africa has all the required
ingredients needed to positively surprise global markets in the coming years.
With a population of near 200 million, a youthful workforce and an incredible
abundance of natural resources that seem to be underexploited, agricultural
development may be the medicine to Nigeria’s illness. If the nation is able to
elevate the agriculture sector to a respectable point of self-sufficiency, this
will be the first step in creating a stable and sustainable macroeconomic
environment. This is part of the
government's increased efforts to develop infrastructure to stimulate growth
further.
The presidential
elections in February will certainly be a double-edged sword for the Nigerian
economy. Economic growth has the potential to expand next year thanks to
increased government spending ahead of the elections. However, increased
spending will inevitably rekindle inflationary pressures ultimately forcing the
Central Bank of Nigeria (CBN) to re-evaluate its monetary policy stance. While
speculations were initially rife over the CBN cutting interest rates in an
effort to support growth, rising interest rates in the United States and Dollar
strength resulted in the CBN missing the window of opportunity. With the new
minimum wage in Nigeria likely to stoke inflationary pressures and falling Oil
prices weighing on the Naira’s peg against the Dollar, higher interest rates
may be enforced to maintain reserves.
Focusing on
foreign exchange, the Naira’s stability against the Dollar remains the product
of repeated intervention by the CBN. Higher Oil prices during the third trading
quarter helped the CBN defend the Naira against an appreciating Dollar. With
market conditions changing drastically and Oil weakness currently a dominant
market theme, the CBN may face difficulties supporting the Naira.
As we head into
the final trading month of 2018, the outlook for the Nigerian economy is poised
to remain heavily influenced by Oil prices, the Dollar, global trade
developments and pre-election jitters. Although consumer prices in Nigeria
eased in October to 11.26%, government spending, and the new minimum wage are
seen rekindling inflationary pressures. With the Fed expected to raise interest
rates in December, Nigeria is at risk of experiencing capital outflows. Oil
prices remain gripped by concerns over excessive supply in the markets and
fears of falling demand – themes that may translate to falling government
revenues and vulnerable Naira exchange.
Investors will
be keeping a very close eye on the pending GDP report for Q3 which should
provide fresh insight into the health of the largest economy in Africa.
Sentiment towards the nation could end the year on a positive note if economic
growth during the third trading quarter meets or exceeds expectations.
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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