Macroeconomic Report & Economic Updates

December 1, 2016

Nigeria Economic Update (Issue 50)

Crude oil price experienced
a mixed week from November 18 to November 25, 2016. Specifically, OPEC basket
price and Brent crude price fluctuated, to a daily average of $44.6 (from
$42.33)and $48.3 (from $46.86)per barrel
respectively. The present oil volatility is as a result of sell-offs,
attributable to speculations/fears of an insufficient production cut by OPEC (in
its bid to control oversupply) – a deal scheduled for its next meeting on
November 30th 2016. This speculations have arisen due to
the reluctance of major OPEC member country (Saudi Arabia) to participate in the
potential oil cut dealwhich could exert a downward pressure on oil
prices. However, oil prices should rise if OPEC members agree to the oil cut
deal. Irrespective of the outcome of the meeting, Nigeria is exempted from the
potential crude oil cut. Thus, it will be optimal for the government to act
quickly to address the insurgence in the Niger Delta region, in order to raise domestic oil production as much as
possible.

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Nigeria Economic Update (Issue 1)

GDP growth rate increased marginally by 2.84 percent in Q3 2015 from 2.35 percent in the preceding quarter. Nominal GDP increased to N24.3 million from N22.9 million in the preceding quarter. Growth in this period was attributed to the improved performance of the non-oil sector which grew by 3.05 percent. The Sectoral disaggregation shows that the Services and Agricultural sectors grew by 3.97 and 3.46 percent respectively, while the Manufacturing sector shrank by 1.75 percent.

Nigeria Economic Update (Issue 23)

Recently released report by the NBS shows an increase in Unemployment and Underemployment rates for 2016Q4 relative to preceding and corresponding quarters. The unemployment rate, at 14.2 percent, indicates a 3.8% points YoY4increase, and a 0.3% points QoQ increase with the number of unemployed people increasing by 351,051 persons. Similarly, underemployment rate grew (QoQ) by 1.3% points to 21%, representing about 17 million underemployed persons as at the quarter. The rise in unemployment/underemployment rate is attributable to the disproportionate rise in labour force vis--vis job creation, in addition to slow-down in economic/business activities during the quarter. Going forward, the government should make efforts to strengthen and expand Nigerias entrepreneurial infrastructure.

Nigeria Economic Update (Issue 24)

Crude oil price increased, in the week under review, to its highest price in 2016. Nigerias bonny light increased by $1.38 from $48.02 per barrel on May 20, 2016 to $49.64 per barrel on May 27, 2016, while Brent crude was sold for $50 per barrel on May 26, 2016. The catalyst for price gains in the period under review is the supply-side contractions, with unplanned production shortages in Nigeria, Canada and Iraq. The upward trend of prices may unlock more supplies in subsequent weeks, but the OPEC meeting scheduled for June 2, 2016, could moderate the effect. Nigeria is expected to benefit from crude oil price rising above the $38 per barrel benchmark. Unfortunately, supply disruptions continue to negatively affect oil revenue and may have contributed to the depletion of external reserve by over $153 millionthis week. The federal government, in collaboration with relevant security agencies, should find a lasting solution to the vandalism of oil pipelines and production facilities.