Macroeconomic Report & Economic Updates

March 13, 2017

Nigeria Economic Update (Issue 8)

The falling tide in the international value
of Naira experienced a reversal in the review week with naira appreciating
significantly by 11 percent from N516/$ on February 17, 2017 to N460/$ on
February 24, 2017 at the parallel market the first appreciation
since December 2016. The recent rise in naira value was driven by forex
supply-demand gap closure, sequel to improvements in dollar liquidity. The
recent CBN Special intervention (e.g. the auction and sale of $370 million and
$1.5 million respectively, by the apex bank during the week) and its
revised forex policy guidelinescontributed in dousing speculations
in the parallel market, thus gradually narrowing the margin between the
interbank and parallel market rates. Given that the sustainability of naira
appreciation is strongly hinged on the improvement in foreign reserve which is
largely dependent on crude oil sales, the government should continue its
efforts at calming tensions in the Niger Delta region.

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Nigeria Economic Update (Issue 23)

Recent Data on Nigerias Real GDP growth rate (Year-on-Year) declined by 2.47 percentage points, from 2.11 per cent in 2015Q4 to -0.36 percent in 2016Q11. This is the lowest GDP growth rate since 2004Q2 (-0.81 percent). The Oil sector continued to contract, as -1.89 percent growth was recorded in 2016Q1. The negative growth witnessed in the oil sector was likely driven by the fall in global oil prices by $9.732 and decline in domestic crude oil production, relative to preceding quarter. Similarly, the Non-oil sector witnessed a negative growth as it declined by 3.32 percentage points from 3.14 percent in 2015 Q4 to -0.18 percent in 2016Q1. The underperformance in the non-oil sector was driven by significant contractions in financial (by 17.69 percent), manufacturing (by 8.77 percent), and real estate (by 5.48 percent) sub-sectors. Given that the present economic fundamentals point to a likely recession in 2016Q2, the government can stir economic activities by speeding up the budget implementation process to spur growth in the non-oil sector and the economy at large. More so, the domestic production shock in the oil sector needs to be addressed to effectively leverage on the present marginal rise in crude oil prices.

Appropriation Act (Budget)

Appropriation Act (Budget): Capital expenditure remarkably increased in 2016 relative to preceding year, on the account of the present governments renewed commitment to infrastructure development.