Nigerian businesses are showing more optimism on the macro-economy in December as the confidence index (outlook) rose by 65.6 points from 64.4 index point in the previous month outlook.
The analysis of business expansion plans by sector next month (December) showed that the services sector indicates greater disposition for expansion with an index of 32.1 followed by wholesale/retail trade and industrial sectors with 18.8 and 8.2 index points, respectively.
The Central Bank of Nigeria (CBN) on Tuesday, released its business expectation survey, which show that respondents’ overall confidence index (CI) on the macro economy in November 2018 was more optimistic at 25.9 point, when compared to its level of 23.2 index points recorded in October 2018.
The optimism on the macro economy in November was driven by the opinion of respondents from services (14.9 points), industrial (7.8 points), wholesale/retail trade (2.6 points) and construction (0.5 points) sectors, whereas the drivers of the optimism for next month were services (37.0 points), industrial (19.2 points), wholesale/retail trade (6.6 points) and construction (2.8 points) sectors.
The positive outlook by type of business in November 2018 was driven by businesses that are neither import- nor export-oriented (18.9 points), import-oriented (4.5 points), both import- and export-oriented (1.8 points) and those that are export- related (0.7 points).
However, the surveyed firms identified insufficient power supply (64.7 points), high interest rate (57.9 points), unfavourable economic climate (55.1 points), financial problems (51.2 points), unclear economic laws (51.0 points), unfavourable political climate (48.6 points), access to credit (41.3 points) and insufficient demand (41.2 points) as the major factors constraining business activity in the current month.
“In light of the current developments in both the global and domestic economies, and based on extensive simulations, the CBN is of the view that the short-term outlook of the Nigerian economy remains good”, Godwin Emefiele, governor of the CBN said.
In terms of inflation rate, respondent firms expect inflation rate to rise in both the current and next months, with confidence indices of 7.0 and 3.4 points for the current and next months, respectively.
Similarly, respondent firms expect borrowing rates to rise in both current month and next month as the confidence indices stood at 5.8 and 2.2 points, respectively.
The CBN projects inflation rate to rise slightly to about 11.4 percent the rest of 2018 and towards mid-2019 and then moderate thereafter.