Nigeria records 3.5% Economic Growth in Q1

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FILE PHOTO: People walk past roadside stalls with umbrellas in the central business district, near Marina in Lagos, Nigeria December 13, 2016. REUTERS/Akintunde Akinleye/File Photo

Economy

Wednesday, May 16,2018

N igeria’s economy, measured by the gross domestic product, grew by 3.55% in the first quarter of 2018 from 1.92% in Q4’17.

Speaking at a media briefing on the May 2018 edition of its monthly economic and financial market outlook, the head of FSDH Research of the FSDH Merchant Bank, Ayo Akinwunmi, said the projection is based on the persistent economic expansion recorded in most subsectors of the economy as reflected in the monthly purchasing managers index report, AllAfrica reported.

He stated: “The PMI survey that the Central Bank of Nigeria published for the month of April 2018 shows an expansion. The manufacturing PMI in the month of April stood at 56.9% from 56.7% recorded in March. Similarly, the non-manufacturing PMI improved to 57.5 points from 57.2 points in March.”

The expansion in the PMI is an indication of the growth that FSDH Research expects in the economy in the short-to-medium term. FSDH Research expects a GDP growth rate of 3.55% in Q1 2018. “This positive recovery in the economy should drive credit creation, both in the manufacturing and non-manufacturing sectors.”

In its review of the recent $2.5 billion currency swap between the Central Bank of Nigeria and the Peoples Bank of China, the CBN said there is need for Nigeria to develop competitive advantage in the production of certain exportable goods that China currently imports in order for Nigeria to get the full benefits from this currency swap deal.

Akinwunmi said: “FSDH Research’s analysis of the trade relationship between Nigeria and China in the last five years shows that Nigeria has a negative trade balance with China. While we believe the currency swap agreement may improve foreign exchange stability and aid external reserves management to a certain extent, it has some downside risks.

“The fact that it removes some trade barriers between the two countries may increase Nigeria’s imports from China. This development, without a corresponding increase in Nigeria’s exports to China, will increase Nigeria’s trade deficit with China. Nigeria needs to develop competitive advantage in the production of certain exportable goods that China currently imports in order for Nigeria to get the full benefits from this currency swap deal.”

 

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