FBNQuest projects Nigeria’s economy to grow 3.2% in 2023

FBNQuest has forecasted the Nigerian economy to grow by 3.2 percent in 2023 despite lingering fuel and naira scarcity.

This was disclosed by FBNQuest in its Research Outlook for 2023 released recently.

The report captured the firm’s view on the Nigerian economy, the 2023 general elections, socio-political environment, traditional asset classes (fixed income and equities) as well as expectations for the current year.

The growth, post-election economic reforms, modest gains in the equities market, and higher interest rates were topical things highlighted in the report.

“Nigeria’s economy will grow by 3.2 percent this year, compared with 3.1 percent in 2022,” the report said.

“With respect to non-oil sector growth, the report points out that non-oil GDP growth had averaged 4.7 percent year-on-year over the past eight quarters up to the fourth quarter of 2022, compared to 0.4 percent in the previous eight quarters.

“More recently, the services sectors, which accounted for around 56 percent of the economy in Q4 2022, expanded by 5.7 percent in the fourth quarter of 2022,” the report said.

Tunde Abidoye, head of research, macroeconomics, and fixed income at FBNQuest, said that the transition of power and the commencement of the new administration’s term will set the tone for the second half of the year as the new government is expected to implement reforms that will stimulate growth and investment.

“Nigeria’s new president faces several challenges including the fiscal pressures related to fuel subsidies, a huge budget deficit, difficulties with forex liquidity, and low productivity in the oil sector,” he said.

“Nevertheless, we expect a new manager’s bounce for the economy that will support the moderate rise in equities while interest rates are expected to remain elevated,” Abidoye added.

FBNQuest forecasts another positive year for equities in 2023, projecting gains of 15 percent amid a slow first half and relatively strong performance in the second half of the year.

In the fixed-income market, FBNQuest expects market yields to remain elevated through Q1 2023 and most of the rest of the year.