#NGOutlook2018: Nigeria’s Sustained Economic Recovery in H2, 2018, Hinges on Conditions in the Oil M


Tuesday, July 24, 2018 8.00PM / Proshare WebTV 

Nigeria’s prospects for sustained economic growth in H2, 2018 hinges on the favourable conditions in the global oil market which continues to support Nigeria’s external trade balance, government revenue, business and investment optimism. 

This was a key assertion from the United Capital and Proshare tweet meet focusing on the H2, 2018 Nigerian economic outlook, discussing the theme “Caught between two stools”. 

It believed the key drivers include an above $60.0 per barrel oil price as well as stable local production which we anticipate to further boost oil GDP despite OPEC+’s agreement to maintain the prior 1.8mbpd cut on global supply and restore compliance to 100%. 

The report stressed that Nigeria’s H2, 2018 economic outlook will come between “uncertainties around global geopolitical/local pre-election uncertainties”  and “investor optimism about the gradual improvement in the macroeconomic space”. 

Giving further updates from its report the United Capital research team said it expects pre-election politics to take center stage amid rising global uncertainties. 

Speaking further on the H2, 2018 outlook  United Capital shared “We anticipate a choppier socio-political outlook as the usual electioneering cycle plays out again”. 

It noted that the downside risk to stronger growth, however, include the clashes between Herders and Farmers, which dragged Agric  GDP in Q1, 2018 & the oil market volatility. 

On the current downturn in the equities market, the report noted that it was driven by volatility in the global market as well as pre-election uncertainties in Nigeria. 

From the H1, 2018 report United Capital listed the following as key takeaways; 

1 Macro variables in the Nigerian economy moved in tandem with our expectations in H1-18. Q1-18 GDP sustained gradual recovery, up 1.95%y/y. Headline inflation rate moderated to 11.6% in May, 2018.

2. FX rates were broadly stable across segments as external reserves surged, adding $9.0bn from January, 2018 to June, 2018, settling at $47.8bn.

3. Furthermore, oil prices surprised positively, averaging $71.0/b relative to our projected $55.0-60.0/b for the year. Monetary policy stance was less hawkish, though policy rates were held unchanged throughout the period.

4. However, fiscal policy remained aggressive as the second tranche of the $5.0bn Eurobond approved by the national assembly in 2017 was issued in Feb-18 while the Voluntary Asset and Income Declaration Scheme (VAIDS) deadline was extended till June 2018. 

Looking at the economy, it revised Nigeria’s FY 2018 growth to 2.3% and inflation and the year end average inflation rate to settle at 12.6%. 

On the direction of the Central Bank of Nigeria monetary policy, United Capital was of the view  that the MPC is more concerned about FX stability, hence, will continue to choose the higher rate and currency stability over lower rate and faster growth. 

This is the second year that United Capital a leading Nigerian investment banking group and Proshare Nigeria’s leading financial information hub, are partnering through the tweet meet to engage Nigerians on the economy.

Proshare Nigeria Pvt. Ltd.

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