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Analysts: Nigeria’s Q2 GDP to grow by 0.5%

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Analysts: Nigeria’s Q2 GDP to grow by 0.5%

 

Tony Chukwunyem

Widespread predictions that Nigeria’s economy will be out of recession this year may be coming to pass, as the latest forecast by analysts at Financial Derivatives Company Limited (FDC) indicate that Gross Domestic Product (GDP) for the second quarter of 2017 will increase by 0.5 per cent.
The experts, who made the prediction in the firm’s July Lagos Business School (LBS) presentation, obtained by New Telegraph last weekend, stated: “Q2’17 growth figures expected to climb 0.5per cent into positive territory; the GDP by expenditure approach reveals that net exports now higher than government spending; household consumption remains the largest single component of GDP at 61per cent.”
They also cited exchange rate stability-which they noted was the result of the Central Bank of Nigeria’ (CBN) interventions in the forex market – as well as the steady drop in the inflation rate in recent months.
The analysts said : “Y-o-Y inflation decelerated for the 4th consecutive month to 16.25per cent in May. Core inflation numbers plunged to 13per cent, the 7th consecutive month of decline; food inflation declined marginally to 19.27per cent from 19.30per cent M-o-M inflation however, increased by 28bps to 1.88 per cent.”
They further noted that the CBN’s and FBN’s Purchasing Managers’ Indexes (PMIs) for June increased to 52.9 and 55.9 respectively.
The CBN Governor, Mr. Godwin Emefiele, had announced last April that the economy will grow out of recession by the end of the second quarter.
Similarly, the World Bank had projected last January that Nigeria’s economy will recover from recession in 2017 and also grow by one per cent during the year.
Also, in its bi-annual economic update released in May, the bank reiterated that the economy will witness fragile economic growth in 2017 based on improved oil prices and restoration of peace in the Niger Delta.
The International Monetary Fund (IMF) also shares this view as it projects a 0.8 per cent growth for the Nigerian economy in 2017.
However, the Statistician-General of the Federation, Dr Yemi Kale, seems to have disputed these projections recently when he was reported as saying that the economy will not be out of recession until 2018.
He was quoted to have said : “If all prices do not collapse including Niger Delta crisis, by 2018 we would have recovered. At least all the indicators are suggesting things are getting better. It was an extremely difficult period and we all felt it. I will say that most of the indicators suggest that we are coming out of it.”
He stressed that there was a difference between technical recovery and the recovery Nigerians are wishing for.
Kale said : “When you tell somebody, the economy is coming out of recession, they would ask what you mean. After all, prices are still high. Coming out of recession means positive growth. And your positive growth can be plus zero point one (+0.1). That does not mean everything is fine. It technically means you are no longer in negative again.”
According to him, the fact that the country is no longer in negative does not translate to buoyancy, stressing that there is going to be a gradual process of recovery as things are improving.
He noted that 2016 was extremely difficult for the nation.
Kale said : “I have to speak frankly as I have always done in the past. The economy has been slowing down since 2014. Anybody that has been following the numbers should know that the economy was slowing down. From six it went to five then to four, then to three and went to two before it became negative.
“The fact that the economy was slowing down did not mean it went from six to zero, no! It was gradual. If you have been paying attention to data, you would have known that problem was looming. Since it was an election year, people did not pay that rapt attention. And so 2016 was horrible as we went through a lot of hell. We had an economy in my opinion that is dysfunctional.”

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