Macroeconomic Report & Economic Updates

June 26, 2018

Nigeria Economic Update (Issue 21)

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As expected, the Monetary Policy Committee left the policy interest rate (MPR) and other parameters unchanged. At 14 percent, the MPR has been left unchanged for the 10th consecutive period1; likewise the CRR at 22.5 percent, Liquidity Ratio at 30.0 percent; and Asymmetric corridor at +200 and -500 basis points around the MPR. All except one member of the MPC agreed to keep rates on hold, mainly in anticipation of a more precise direction of key macroeconomic indicators, including the passage and implementation of the 2018 budget. Complementary factors considered for the hold also points to the current moderation in inflation rate towards single digit, as well as higher reserve levels




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Nigeria Economic Update (Issue 21)

Recent data from the National Bureau of Statistics (NBS) shows that the value of capital imported to Nigeria declined by 54.34 percent; from $1.56 billion 2015Q4to $710.97 million in 2016Q11. This is the lowest value since the data was first released in 2007. Huge declines in Portfolio Investment (71.54 percent) and other Investment (44.84 percent) were the major drivers of the trend within the period. A myriad of factors have contributed to the decline in investments. The plunge in crude oil prices, and the resultant negative signals on investors confidence, was a key factor. This was exacerbated by the FOREX restrictions and delays in the assentation of 2016 Appropriation Bill. While the slight increases in oil prices and the recent signing of the budget into law could improve the general economic prospects, monetary authorities need to proffer solutions to the negative effects of the current FOREX restrictions on investments.