As Nigeria gradually approaches second half of 2018, analysts are optimistic that the economy will continue to do better if political risks and the current insecurity situation caused by the herdsmen, is controlled by the government.
Nigeria was in recession for five consecutive quarters but returned to positive growth of 0.72 percent in the second quarter (Q2) 2017 from -0.67 percent in Q1 2016.
“Broadly on the Gross Domestic Product (GDP) growth rate, we are beginning to see recovery expectation towards the second half of the year. It may likely recover faster than what we had last year” Ayo Akinwunmi, Head of Research FSDH Merchant Bank said in a telephone response.
“The second half of the year should grow faster than the first half provided political risk and the current risk such as the herdsmen crisis are controlled because these are negative to the economy” Akinwunmi said.
Inflation rate continues to fall. In May the inflation rate dropped to 11.60 percent from a high of 15.1 percent in January. “We expect that it will drop possibly to a single digit. However it is still predicated on the federal government to look at what they are going to do to tackle the crisis. Because if you look at the latest GDP year-on-year numbers. You will see that agriculture grew to the lowest in the last 18 quarters” he said.
This means there may be an impending food supply crisis and if there is supply shortage, this will trigger more crises. It might likely have an impact on inflation rate but by and large all things being equal we expect that it will continue to tread downwards a little bit” Akinwunmi concluded
Dolapo Ashiru, a stokebroker said, “If you compare the first half of this year to the first of last year. There is a major difference. This time last year we were stepping out of recession. Our recovery is basically on the back of higher crude oil prices not majorly because of government policies.
Since the beginning of the year the economy has been improving on the back of improved dollar liquidity, lower inflation rate, higher crude oil prices and production.
“The first half of this year has performed in line with expectations from economic growth stand point and I think that it is partly because we now have improved dollar liquidity in the system to support the supply by the CBN to manufactures and other users of foreign exchange and that has been a positive impact of economic activities. Interestingly we saw lower inflation in the first half and elevated crude oil prices which supports government revenues,” Ibrahim Tajudeem, Head of Research, Chaphill Denham said on phone.
“We did not hear of any major pipeline bombings, there was calm in the Niger region which is positive for crude oil production. And another key one is that interest rate were broadly lower which made it presentable for cooperatives to source for cheap funding to be able to drive their businesses,” Tajudeem also added.
On June 20th, 2018, the president signed the budget and there are expectations that the signing of the budget would result to increase in spending to be able to build or complete reforms that is necessary for the growth and development of the country.
“What we really need now is government policies and reforms; right now the government seems to be focusing on election mood. This is elections is being the fore runner more than the policies that we are seeing so that to me is a concern,” Ashiru said.
