Firm projects Nigeria’s economic growth

An investment banking firm, Afrinvest (West Africa) Ltd., has projected Nigeria’s economic growth to improve to 2.5 per cent in 2019 from the 1.9 per cent recorded in 2018.
The firm said in Lagos in its report on the 2019 Outlook for the Nigerian Economic and Financial Markets entitled: “On the Precipice’’.
It said that the growth would be based on the expectation of improved oil, Gross Domestic Product (GDP) and sustained expansion in the non-oil sector.
According to it, the forecast implies that with the population growing at 2.6 per cent to three per cent, Nigerians are projected to remain poorer on the average in 2019.
“We believe this growth outcome will reflect a soft rebound in Agriculture, increased oil output and better performance in the services and manufacturing sectors.
“The downside risks remain the slower than expected recovery in Agriculture, oil prices below budget benchmark of 60 dollars per barrel and oil production at less than two million bars per day, including condensates,” report stated.
The firm said it expected the impact of insecurity to be felt through lower agricultural and oil output.
Afrivest also said, “We assume that the decline in oil production will mirror the drop seen between the 2016 second quarter and 2016 third quarter.”
On agriculture, it said growth would continue at its underwhelming pace of sub two per cent.
“The combined impact of these will lead to a moderation in growth below one per cent.
“Meanwhile, growth in the services and manufacturing sectors will weaken as lower oil exports and investment prompt an exchange rate depreciation.
“This will lead to high input costs for manufacturers, and pricing adjustments will affect consumer purchasing power,” it added.
On inflation outlook, it believed that power, oil and gas reforms posed inflationary risks.
The firm said that the direction of inflation was positive for most of 2018 as there was a deceleration to a 30-month low of 11.1 per cent in July 2018 from 15.1 per cent in January same year.
“We estimate monthly inflation to average 12.2 per cent in 2019, an improvement over 16.5 per cent in 2017.
“In 2019, we expect inflation to remain elevated at double-digit levels, but we note that the inflation trajectory remains largely unclear for various reasons,” it said.