Nigerian Economy Signals Recovery

The Nigerian economy, which was severely hit in 2016 by the drop in the crude oil price and crude oil production, is beginning to show some signs of positive outlook and recovery, analysts at FSDH Merchant Bank have said.

The economy, which officially entered into a recession in second quarter 2016 following the release of the Gross Domestic Product (GDP) figures that had shown two consecutive quarters of GDP contraction, is showing strong signs of recovery.

FSDH stated in a report that the recovery seemed to be coming on the back of the recent increase in crude oil price, the increase in crude oil production in Nigeria and the Central Bank of Nigeria’s (CBN) continued supply of foreign exchange to both retail and corporate users.

The Purchasing Managers’ Index (PMI) report of the CBN showed that both the Composite PMI and the Production level in the manufacturing sector improved in March 2017. Although the Composite PMI in March 2017 at 47.7 points was below the 50 point level (which suggests a decline in activities), it was an improvement from the month of February 2017 figure of 44.6 points.

The Index for the production level in the manufacturing sector at 50.8 points was however higher than the 50 point level (which suggests an improvement). The monthly rates of increase in both the Composite PMI and the Production level were the second highest in two years and the highest since January 2017.

“Analysts’ consensus is that the inflation rate will continue to trend downward in 2017. This means that the purchasing power of Nigerians should improve and stimulate demand for both consumer and industrial goods,” it added.

In March, the equity market recorded its first Month-on-Month (MoM) appreciation of year 2017, after depreciating for two consecutive months. The Nigerian Stock Exchange All Share Index (NSE ASI) appreciated marginally by 0.74 per cent in March 2017 to close at 25,516.34 points.