Macroeconomic Report & Economic Updates

March 3, 2016

Nigeria Economic Update (Issue 10)

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.

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Nigeria Economic Update (Issue 7)

External reserve dropped slightly by 0.6 per cent from $28.35 billion in January 22 to $28.19 billion in January 295. Considering the continuous decline, government has stepped up efforts towards financing the deficit in the proposed budget through borrowing. At the forex market, the official exchange rate remained unchanged at N197/$ while the naira depreciated at the parallel market by 2.36 percent from N297/$ to N304/$ between January 22 and 296. Despite the huge spread between the official and parallel market exchange rates, the monetary authorities maintained its fixed exchange rate regime at the official forex market. It is expected that if the demand pressure for dollar persists, the value of naira may decline in the near term.

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.