Nigeria’s H2 Economic Outlook Brighter as Non-Oil Sector, Oil Output Resurges

Date:

Nigeria’s economic picture is becoming brighter as the non-oil sector returned to growth in Q1’17, the PMI rose to an over one-year high in May and oil production has increased significantly since last year’s nadir, following improved security situation in the Niger Delta region.

Thank you for reading this post, don't forget to subscribe!

Many determining themes from H1’17 are likely to filter through to H2’17. Redress of the foreign exchange (FX) market, security of oil production infrastructure, and the efficiency of budget implementation will play significant roles in shaping the year.

We revise our forecast for 2017 GDP growth to 0.8% (previous: 0.7%), supported by consistent improvements in manufacturing output as well as an increase in crude oil production.

With the high base of 2016 and the upcoming harvest season, we project that headline inflation should decline to 14.0% by December 2017. However, the evolution of the FX market will be a key factor.

With the new advancements in the production of Shale gas, lower oil price is a key risk to keep in view in H2 given the direct implication on recent improvements in FX liquidity.

Thus, a negative change in the current FX regime could throw our GDP and inflation targets off course. Financial Markets H2’17 seems more promising for the equities market given expectations of improved portfolio inflows and sustained participation of domestic investors.

Our outlook for local bond yields in H2’17 is largely mixed and depends on 2 major factors – the apex bank’s decision to either retain high interest rates by sustaining its aggressive liquidity mop-ups or slash rates in response to falling inflation and need to reduce government’s borrowing cost given the likelihood of increased local borrowings to fund the 2017 budget.

Global Economy – Global Economic Growth Picking Momentum
Meanwhile the global economy is ready to post another strong outturn in H2’17 on the back of healthy economic dynamics in both emerging and advanced economies.

Interestingly, the pick-up in global growth contrasts with popular expectations at the beginning of the year when it seemed that political factors would outweigh economic considerations following Brexit and the election of Donald Trump.

On the flipside, uncertainty is high on Trump’s fiscal measures, while rising political uncertainty in Brazil and the Middle East highlights the fragility of global recovery.

The International Monetary Fund (IMF) raised its 2017 global growth forecast by 10bps to 3.5% while the World Bank, in its June outlook report, maintained its forecast of 2.7%, but referenced the improving global confidence and acceleration in global manufacturing and trade.


Share post:

Subscribe

Popular

More like this
Related

Access Holdings to pay N1.80 as final dividend to shareholder

March 28, 2024. Azonuchechi Chukwu. Access Holdings has revealed plans to...

Police gun down two notorious bandits in Benue

March 28, 2024. Azonuchechi Chukwu. Men of Operation Zenda, a Joint...

Army declares eight wanted in connection with the k!lling of its officers in Okuama

March 28, 2024. Azonuchechi Chukwu. The Nigerian Army has declared eight...

Naira Appreciates Against Dollar at the NAFEM Window

March 28, 2024. Azonuchechi Chukwu. The Naira’s euphoric appreciation against the...
Social Media Auto Publish Powered By : XYZScripts.com

Discover more from Naija247news

Subscribe now to keep reading and get access to the full archive.

Continue reading