Macroeconomic Report & Economic Updates
August 19, 2017
Africa Economic Update (Issue 5)
African countries have been left out of the recent benefits accruing from international trade. For example, they accounted for only 3.2 percent of world trade in 2013 compared to 5 percent in the mid-1960s. Regional integration can reverse this weak performance as it holds the promise for countries to gain from the resultant economies of scale and enhanced competitiveness. It will also help to expand the markets for foreign direct investment.
Nigerias inflation rate remained above CBNs bandwidth of 6-9 per cent. Specifically, the inflation rate increased slightly from 9.55 percent in December 2015 to 9.62 percent in January 20165. The Core sub-index remains the main driver of inflation in Nigeria. The higher prices of items in the Core sub-index such as clothing and foot wears are reflective of higher domestic production costs as a result of the decline in the value of the naira relative to the dollar. However, in the period, the price increase was moderated by the stable price of Premium Motor Spirit (PMS). Going forward, without any sustainable policy measure to prevent the further depreciation of the naira, inflation may exceed the current single digit inflation rate in the near term.
Recently released World Economic Outlook by the International Monetary Fund (IMF) projects economic activities to increase significantly in developing countries- especially Nigeria. Annual real output is expected to grow by 0.8 percent in 2017 from the contraction of 1.5 percent in 20161. Improvement in economic activities is hinged on prospective favorable effects of continued increase in commodity export price (Crude oil is expected to increase to $55 per barrel in 2017 compared to $46 in 2016).