FSDH Foresees 3.16% GDP Growth for Nigeria in 2018

Analysts at FSDH Merchant Bank have estimated a real Gross Domestic Product (GDP) growth rate of 3.16 per cent for Nigeria in 2018.

In addition, the Lagos-based firm also projected an ambitious growth rate of 4.09 per cent for the country in 2019.

FSDH Merchant Bank made the forecasts in its 2018 economic projection that was obtained on Monday.

Although the fourth quarter 2017 GDP figures are yet to be released by the National Bureau of Statistics (NBS), the Nigerian economy had grown by 1.4 per cent in the third quarter (Q3) of 2017, effectively doubling the revised growth rate of 0.72 per cent recorded in the second quarter of the year.

The Q3 GDP figures was the second consecutive growth since the economy exited the recession in the second quarter of 2017. The growth rate then was 3.74 percentage points higher than the rate recorded in the corresponding quarter of 2016 (-2.34 per cent) and higher by 0.68 percentage points than the GDP growth rate recorded in the preceding quarter (Q2 2017), having been revised by the statistical agency to 0.72 per cent, from 0.55 per cent.

The FSDH Merchant Bank forecast for 2018 was slightly higher than the forecast of the World Bank and International Monetary Fund (IMF) of 2.5 per cent and 2.1 per cent respectively.

However, the firm explained in its latest report that with the population growing at 2.75 per cent, the country requires growth rate in excess of five per cent to substantially improve the well-being of Nigerians.

“Agriculture, Trade, and Mining & Quarrying sectors, with forecast growth rates of four per cent, two per cent and 3.2 per cent would drive the 3.16 per cent growth rate in 2018. Other leading sectors of the economy that would contribute to the growth are: Information and Communication (I&C): 2.2 per cent; Real Estate: 2.5 per cent; Construction: four per cent and Manufacturing: one per cent.

“Agriculture, with a growth of 3.06 per cent; Mining and Quarrying: 25.44 per cent and Other Services: 1.72 per cent were the three leading sectors that contributed to the growth rate of 1.40 per cent recorded in Q3 2017,” it added.

It noted that the increase in the supply of foreign exchange has improved economic activities across other sectors of the Nigerian economy.

FSDH Research stated that it had observed increased activities in Agriculture, Mining and Quarrying (oil and gas), manufacturing, Trade, Real Estate and I&C in the last few months, adding that thegrowth in the equity market has created additional wealth that would stimulate effective demand in the economy.

“Some light manufacturing activities are also taking place – stimulating demand for raw materials from Agriculture. The current oil price will encourage investment activities in the oil and gas sector. Trade sector would also benefit from the increase in consumer purchasing power.