Experts optimistic on better economy in 2018

Experts have predicted better performance of the Nigerian economy in 2018.

A financial analyst and head, Department of Banking and Finance at the Nasarawa State University, Keffi, Dr. Uche Uwaleke, said there will be tangible improvements in the economy going by the various parameters that support the countries revenue sources such as oil prices.

Uwaleke also predicted that the monetary policy rates may likely be retained by the Central Bank of Nigeria in its first quarter meeting.

“Headline inflation, which is beginning to prove sticky downwards, will spike in January. In response, the Monetary Policy Committee members in their meeting of January (that is, if a quorum is eventually formed) will leave the policy parameters (namely the Monetary Policy Rate at 14 per cent, Cash Reserve Ratio at 22.5 per cent and Liquidity ratio at 30 per cent) unchanged.

“There will be no significant departure from this monetary policy stance even during the MPC meeting of March 2018,” he predicted.

The don also said economic activities in the first quarter of 2018 will be slow, especially on the part of foreign investors

“The level of capital importation, comprising mainly portfolio investments, will not be significant relative to the third and fourth quarters of 2017 since foreign investors are likely to adopt a wait-andsee attitude during this period.

“Expectedly, the stock market will largely be bearish. The first quarter of 2018 will be a good time for risk-taking investors to take positions in undervalued stocks. Overall, economic activities will progress at a snail’s pace in the first quarter of 2018 with higher unemployment rate than the previous quarter, a little shy of 20 per cent.

“Real GDP growth rate, year on year, will likely hit the two per cent mark but it will be more from base effect than actual expansion in economic activities considering that the economy was still in recession during the corresponding period of the preceding year,” he also said

The financial analyst however forecast higher economic activities in the second quarter of 2018.

“The economy will be at a cruising point during the second and third quarters of 2018. Much of the expansion in economic activities will occur during this period.

“The IMF has forecast a real GDP growth rate of 2.1 per cent for Nigeria while the Federal Government’s target is 3.5 per cent as contained in the 2018 budget. Real GDP growth for 2018 will lie somewhere in-between.

“Improvements in security and oil infrastructure will likely boost oil production up to the level (2.3 million barrels per day) envisaged in the 2018 budget. Healthy external reserves, sufficient to finance over seven months of imports, will support a stable exchange rate and convergence of rates across all the segments of the forex market,” he added

In the aspect of Ease of Doing business, the financial expert said the third quarter of the year will be more efficient in the area of flexibility of doing business.

“The World Bank’s Ease of Doing Business report that will be released will show a further improvement in the ranking of Nigeria. Not surprisingly, the level of capital importation will likely peak in the third quarter of 2018. The stock market will be bullish, buoyed by the faster rate of economic expansion and the release of impressive half-year results of many quoted companies. For investors in the stock market, this could be the time to take profits,” Dr. Uwaleke said.

“Both the Customs and Federal Inland Revenue Service will record improvements in collection efficiency. Enhanced non-oil revenue from taxes and government independent revenue will support stronger execution of the Federal Government’s capital expenditure plans as well as social welfare programmes contained in the 2018 budget.

“This will rub off positively on jobs (resulting in marginal drop in unemployment and underemployment figures helped by the planting season) but will not be significant given the small scale of these interventions vis-à-vis the number of youths that enter the labour market annually.

“Also, turbulence, from hyper political activities, will likely set in during the fourth quarter of 2018. General elections are only a few months away from this last quarter and so politicallymotivated spending will shift the country’s inflationary challenge.

“Core inflation in 2018 will be highest in December. The CBN will likely tighten monetary policy once again in order to reduce inflation and anchor inflation expectations,” he further explained.

Another financial expert, Usman Bello, said the major developments in the economy in 2018 will be basically in the stability of policies especially in the non-oil sector which is line with the Federal Government’s initiative on Economic Growth and Recovery (ERGP).

“If you look carefully in the 2018 budgets, you will see an unprecedented projection in non-oil revenue of over N4 trillion. Therefore, different policies, especially in the aspect of agricultural exports and tax as well as many others will be pushed in order to realize at least half of the projections,” he added.

In the aspect of poverty reduction, Bello also predicted that the Federal Government through its social intervention programme will employ more youths into the workforce and make profitable ventures for them to boost the economy.

Similarly, aWorld Bank analyst Dr. Raymond Asemakaha, predicted that economic activities in the first quarter will not pick up immediately in the non-oil sector as expected but will record a pick in economic activities that will be occasioned by release of funds for several projects in the agricultural, manufacturing as well as the mining sector.

Asemakaha however cautioned on the need for government to be innovative in boosting its revenue projections through designation of funds to important projects that will boost the county’s economy and also adopt cost saving measures in order to reduce huge sums of monies spent on recurrent expenditure

“By adopting cost service measures, recurrent expenditure can be improved which will curb budget deficit and reduce expenditure and pave way for other important projections in the non-oil sector which will better the economy,” he added.