Friday September 20 2019
Nigeria Keeps Policy Rate at 13.5%
Central Bank of Nigeria | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Central Bank of Nigeria held its monetary policy rate at 13.5 percent during its September meeting, as widely expected, as inflation remains persistently above the Bank's target range of 6-9 percent and economic growth remains sluggish. The bank's governor Godwin Emefiele said at a press conference that tightening rates could constrain growth while loosening it could allow inflation to rise, and that holding rates steady would allow the bank to appraise the impact of current policies, such as changes to the loan to deposit ratios at banks, that comes into force at the end of September, aiming to increase lending and foster growth.

Excerpts from the Central Bank of Nigeria's monetary policy statement:

The persistence of policy uncertainties, financial vulnerabilities and rising geo-political tensions continued to cloud the medium-term outlook. This is evidenced by the sustained weakening of global growth across regions, amplified by the persisting trade tensions between the US and its major trading partners, rising corporate and public debt levels.

On the domestic economy, output growth in 2019 is expected to peak at 2.1 per cent (IMF), 2.2 per cent (World Bank) and 2.27 per cent (CBN). These forecasts remain underpinned by expectations of favourable oil prices which would lead to higher external reserves, stable exchange rate, moderate inflationary pressure as government increases capital expenditure, including enhanced flow of credit to the private sector to stimulate investment, sustained CBN interventions in the real sector, effective implementation of the Economic Recovery Growth Plan (ERGP), build-up of fiscal buffers, as well as improved security in the country.

The MPC noted the improvements in the financial soundness indicators and urged the Management of the Bank to sustain its regulatory surveillance to ensure continued financial system stability. On the recent directives to deposit money banks to increase their Loan-to-Deposit Ratio (LDR), the Committee underscored the need to grow consumer, mortgage and corporate credit to drive aggregate demand and ensure a reduction in unemployment and increase in output growth. In addition, the Committee commended the introduction of the Global Standing Instruction (GSI) initiative aimed at de-risking credit in the industry by committing bank customers to repay their loans to banks. 

In its considerations regarding the policy options to adopt, the MPC as usual, felt compelled to review the options of whether to tighten, hold or loosen. The Committee noted the positive moderation in inflation, though slowly from 11.08 per cent in July to 11.02 per cent in August 2019. Given that this was still above the target range of 6-9 per cent, and considering the pressure on reserve accretion caused by the relatively weak crude oil price, the MPC felt the imperative to tighten. On the contrary, the Committee was of the view that doing so in the midst of a fragile growth outlook would increase the cost of credit, and further contract investment and constrain output growth. On loosening, the Committee felt that this would result in increased system liquidity and hence, heighten inflationary tendencies in the economy. In particular, the MPC was of the view that loosening would drive growth in consumer credit but without a corresponding adjustment in real sector output. The Committee was also convinced that increased liquidity and interest rate moderation would result in exchange rate pressures as money supply rises. 

As regards the option to hold, the MPC opined that the option requires a clear understanding of the quantum and timing of liquidity injections into the economy, before deciding on possible adjustments to the stance of monetary policy. The Committee was also of the opinion that retaining the current position of policy offers pathways to appraising the effects of the suit of heterodox monetary policy to encourage credit delivery to the real sector, especially in the light of the subsisting implementation of the Loanto-Deposit Ratio policy.

In view of the foregoing, the Committee decided by a unanimous vote to retain the Monetary Policy Rate (MPR) at 13.5 per cent and to hold all other policy parameters constant. 




Tuesday September 17 2019
Nigeria Inflation Rate Lowest since 2016
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Nigeria's annual inflation dropped further to 11.02 percent in August 2019, the lowest since January 2016, from 11.08 percent in the prior month. Prices slowed mostly for food amid the ongoing harvest season.

Year-on-year, prices continued to ease primarily for food (13.17 percent vs 13.39 percent in July), as a result of a favourable harvest, despite several pronouncements regarding restrictions on the import of some food items and the recent border closures with Benin and Niger to avoid rice smuggling that is threatening the country's attempt to boost local production. With respect to the latter, no significant impact in prices was observed because the border was only closed from 20 August 2019. Also, cost advanced less for clothing & footwear (9.77 percent vs 9.83 percent) and alcoholic beverages, tobacco and kola (10.05 percent vs 10.16 percent).

In contrast, inflation edged higher for housing & utilities (7.26 percent vs 7.08 percent); transport (8.85 percent vs 8.71 percent); furnishings & household equipment maintenance (9.17 percent vs 9.12 percent); education (8.62 percent vs 8.57 percent); health (9.13 percent vs 9.05 percent); miscellaneous goods & services (8.54 percent vs 8.41 percent); restaurants & hotels (8.11 percent vs 8.07 percent); recreation & culture (7.91 percent vs 7.82 percent) and communications (7.81 percent vs 7.76 percent).

Annual core inflation, which excludes price of volatile agricultural products, fell to 8.68 percent in August, its lowest level since June 2015, from 8.80 percent in the previous month.

On a monthly basis, consumer prices went up 0.99 percent, slightly below a 1.01 percent increase in the previous month.





Tuesday September 03 2019
Nigeria GDP Grows 1.94% YoY in Q2
National Bureau of Statistics | Rafael Gonzalez | rafael.gonzalez@tradingeconomics.com

The economy of Nigeria grew 1.94 percent year-on-year in the second quarter of 2019, easing from an upwardly revised 2.10 percent expansion in the prior period. Stability in oil output as well as the successful political transition were the main drivers to growth.

The oil sector expanded 5.15 percent in the three-months to June of 2019, after contracting 1.46 percent in the prior period. The country produced 1.98 million barrels of crude oil per day, higher than 1.84 MBPD in the same period a year earlier. As a result, the oil sector accounted for 8.82 percent of GDP compared to 8.55 percent a year ago. 

The non-oil sector rose 1.64 percent, slowing from a 2.47 percent growth in the prior quarter. 

Output increased at a softer pace for construction (0.67 percent vs 3.18 percent in Q1); accommodation & food services (2.92 percent vs 4.15 percent); arts, entertainment and recreation (0.81 percent vs 7.12 percent); professional, scientific and technical services (1.21 percent vs 1.73 percent); electricity, gas, steam and air conditioning supply (0.43 percent vs 8.47 percent) and agriculture (1.79 percent vs 3.17 percent). In addition, production dropped for trade (-0.25 percent vs 0.85 percent); real estate (-3.84 percent vs 0.93 percent) and manufacturing (-0.13 percent vs 0.81 percent). On the other hand, output rebounded for human health and social services (1.13 percent vs -0.16 percent) and mining & quarrying (5.02 percent vs -1.37 percent) while production advanced faster for administrative and support services (2.03 percent vs 1.43 percent); education (0.96 percent vs 0.18 percent) and for water supply, sewerage, waste management and remediation (14.35 percent vs 3.75 percent). 

On a quarterly basis, the economy advanced 2.85 percent, rebounding from an upwardly revised 13.69 percent contraction in the first quarter of 2019. 




Friday August 16 2019
Nigeria July Inflation Rate Nears 1-Year Low
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Nigeria's annual inflation rate edged down to 11.08 percent In July 2019 from 11.22 percent in the previous month. It was the lowest inflation rate since July 2018, amid a generalized slowdown in prices, especially for food.

Year-on-year, prices slowed for food (13.39 percent vs 13.56 percent in June); housing & utilities (7.08 percent vs 7.14 percent); transport (8.71 percent vs 8.88 percent); clothing & footwear (9.83 percent vs 9.86 percent); furnishings & household equipment maintenance (9.12 percent vs 9.24 percent); education (8.57 percent vs 8.82 percent); health (9.05 percent vs  9.30 percent); miscellaneous goods & services (8.41 percent vs 8.55 percent); restaurants & hotels (8.07 percent vs 8.24 percent); alcoholic beverages, tobacco and kola (10.16 percent  vs 10.28 percent) and recreation & culture (7.82 percent vs 8.05 percent).

Meanwhile, cost continued to advance for communication (7.76 percent vs 7.73 percent).

Annual core inflation, which excludes price of volatile agricultural products, edged down to 8.80 percent in July, it lowest level since December 2015, from 8.84 percent in the previous month.

On a monthly basis, consumer prices increased 1.01 percent, slightly lower than a 1.07 rise in June.


Tuesday July 23 2019
Nigeria Holds Key Interest Rate at 13.5%
Central Bank of Nigeria | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Central Bank of Nigeria held its monetary policy rate at 13.5 percent during its July meeting, as widely expected, as inflation rate remains well above the bank's target range of 6-9 percent and GDP growth remains subdued. The bank's governor Godwin Emefiele said at a press conference he is not in a hurry to bring interest rates down, but will start reviewing bank's loan to deposit ratio after September 30th aiming at increase lending and stimulate growth.

Excerpts from the Central Bank of Nigeria's monetary policy statement:

The overall medium-term outlook for the global economy remains mixed with indications of continued softening of global output due to persisting policy uncertainties and sustained macroeconomic vulnerabilities. These are likely to be accentuated by the increasing trade tensions between the US and its major trading partners, rising debt levels and geo-political tensions.

On the domestic economy, output growth in 2019 is expected to remain weak, peaking at 2.27 per cent, while inflation is projected at 11.37 per cent by the CBN staff projections by end-2019. The underlying arguments in favour of this forecast include: favourable oil prices; stable exchange rate; moderate inflationary pressures; enhanced flow of credit to the private sector; sustained CBN interventions in the real sector; effective implementation of the Economic Recovery and Growth Plan (ERGP); building fiscal buffers; and improved security in the food producing areas of the country.

In consideration of the specific policy options to adopt; to hold, loosen or tighten, the MPC made the following observations: (i) Whilst the focus on growth was imperative, the mandate of price stability remains sacrosanct; (ii) Given the happenings in the external sector and the fact that inflation is moderating, tightening of monetary policy should not be an option at this time, as restriction of the capacity of the DMBs to create money could curtail their credit creation capabilities.

On the contrary, the Monetary Policy Committee (MPC) was of the view that, whilst loosening could increase money supply, stimulate aggregate demand and strengthen domestic production, the economy could be awash with liquidity especially if loosening drives growth in consumer credit without commensurate adjustment in aggregate output.

On holding the current monetary policy position, the Monetary Policy Committee (MPC) observed that given the recent actions of the Bank’s management involving the prescription of minimum lending thresholds by the deposit money banks to our Deposit Money Banks (DMBs), it is safe to assume that this action, targeted at stimulating credit growth to the real sector would increase credit delivery to the real sector and accelerate investment and economic growth. It also observed that since interest rates were currently trending downwards, it is safer to await the full impact of these policy actions on the economy before a review of the position of monetary policy.


Monday July 15 2019
Nigeria Inflation Rate Eases to 11-Month Low
National Bureau of Statistics | Joana Ferreira | joana.ferreira@tradingeconomics.com

Nigeria's consumer price inflation fell to 11.22 percent year-on-year in June 2019 from 11.40 percent in the previous month. That was the lowest inflation rate since July 2018.

Year-on-year, prices advanced at a softer pace for food (13.56 percent vs 13.79 percent in May); housing and utilities (7.14 percent vs 7.24 percent); clothing and footwear (9.86 percent vs 9.94 percent); transport (8.88 percent vs 9.07 percent); furnishings and household equipment maintenance (9.24 percent vs 9.37 percent); education (8.82 percent vs 9.09 percent); health (9.30 percent vs 9.44 percent); miscellaneous goods and services (8.55 percent vs 8.70 percent); restaurants and hotels (8.24 percent vs 8.48 percent); alcoholic beverage, tobacco and kola (10.28 percent vs 10.42 percent); and recreation and culture (8.05 percent vs 8.26 percent).

On the other hand, communication inflation picked up to 7.73 percent in June from 7.67 percent in May.

Annual core inflation, which excludes price of volatile agricultural products, fell to 8.84 percent in June, its lowest level since January 2016, from 9.03 percent in May.

On a monthly basis, consumer prices were up 1.07 percent, little-changed from a 1.11 percent increase in May.


Monday June 17 2019
Nigeria May Inflation Rate at 5-Month High of 11.40%
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Nigeria rose slightly to 11.40 percent in May 2019 from 11.37 percent in the prior month. It is the highest inflation rate since December, as prices continued to increase mostly for food.

Year-on-year, prices advanced faster for food (13.79 percent vs 13.70 percent in April); communication (7.67 percent vs 7.59 percent) and alcoholic beverages, tobacco & kola (10.42 percent vs 10.33 percent).

On the other hand, inflation slowed for housing & utilities (7.24 percent vs 7.25 percent); transport (9.07 percent vs 9.24 percent); clothing & footwear (9.94 percent vs 9.95 percent); furnishings (9.37 percent vs 9.43 percent); education (9.09 percent vs 9.32 percent); health (9.44 percent vs 9.56 percent); miscellaneous goods & services (8.70 percent vs 8.85 percent); restaurants & hotels (8.48 percent vs 8.66 percent) and recreation & culture (8.26 percent vs 8.42 percent).

Annual core inflation, which excludes price of volatile agricultural products, fell to 9.03 percent in May from 9.28 percent in April, hitting its lowest level since January 2016.

On a monthly basis, consumer prices went up 1.11 percent, following a 0.94 percent rise in the previous month. It is the highest monthly inflation rate since last July.


Tuesday May 21 2019
Nigeria Holds Interest Rate Steady at 13.5%
Central Bank of Nigeria | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Central Bank of Nigeria left its benchmark interest rate steady at 13.5% on May 21st 2019, as widely expected, following a surprise 0.5 percentage point cut at the previous meeting. The decision came as headline inflation edged up to 11.37% in April from 11.25% in the prior month, moving further above the bank's target range of 6%-9%. Policymakers also mentioned that growth remains fragile as economy expanded only 2.01% in Q1 2019 compared to 2.38% in the prior quarter, amid a slump in the country's oil sector.

Excerpts from the Statement by the Central Bank of Nigeria:

Available output data from the National Bureau of Statistics (NBS) showed that real Gross Domestic Product (GDP) grew by 2.01 per cent in the first quarter of 2019 compared with 2.38 and 1.89 per cent in the previous and corresponding quarters of 2018, respectively. This was largely driven by the non-oil sector, which grew by 2.47 per cent in the first quarter of 2019 while the oil sector contracted by 2.40 per cent. Staff projections indicate real GDP growth of 2.34 and 2.36 per cent in Q2 2019 and Q3 2019, respectively, including a reduction in the unemployment rate. The Monetary Policy Committee observed that actual output remains below potential, implying that the economy still had sufficient headroom for non-inflationary growth. This is expected to be driven largely by sustained stability in the financial system; continued special interventions in Agriculture, manufacturing and SMEs sectors, by the Bank; sustained effort in improving transport infrastructure to address distribution challenges; continued expansion of business activities as indicated by the PMI and increased supply of foreign exchange to growth-stimulating sectors of the economy, among others.

The Committee noted the growth in broad money supply (M3) by 5.42 per cent in April 2019 from the level at end-December 2018, annualized to 16.36 per cent, above the indicative benchmark rate of 14.47 per cent for 2019. This was largely driven by the growth of 19.62 per cent in Net Domestic Assets (NDA). In contrast, Net Foreign Assets (NFA) contracted by 5.83 per cent in April 2019 relative to the level at end-December 2018. In spite of the significant underperformance of M1 at -4.26 per cent annualised to -12.77 per cent, M2 grew by 1.85 per cent in April 2019, annualized to 5.54 per cent, which was significantly below the benchmark rate of 12.99 per cent for 2019. This development was largely due to the growth in time and savings deposits by 6.53 per cent. The Net Domestic Credit (NDC) grew by 19.31 per cent in April 2019 from the level at end-December 2018, annualized to 57.92 per cent, above its indicative benchmark of 11.82 per cent. The growth in NDC was attributed to the significant increase in credit to both government and the private sector by 64.44 and 9.64 per cent, respectively, in April 2019, compared with end-December 2018. The Committee noted the developments in the monetary aggregates and enjoined the Bank to initiate moves towards improving lending to the private sector and urged other intermediary institutions in the financial sector to support these initiatives by improving their credit delivery to boost output growth.

The Committee noted the uptick in inflation as headline inflation (year-onyear) rose slightly to 11.37 per cent in April 2019 from 11.25 per cent in March 2019. The increase in headline inflation was driven mainly by food inflation which rose by 13.70 per cent in April 2019 from 13.45 per cent in March 2019. Core inflation, however, declined marginally to 9.28 per cent in April from 9.46 per cent in March 2019. In April 2019, month-on-month headline, food and core inflation increased to 0.94, 1.14 and 0.70 per cent from 0.79, 0.88 and 0.53 per cent in March 2019, respectively. The MPC noted that the recent uptick in inflationary pressure was seasonally driven and anticipated.


Monday May 20 2019
Nigeria Q1 GDP Growth Slows More than Expected
National Bureau of Statistics | Agna Gabriel | agna.gabriel@tradingeconomics.com

Nigeria’s gross domestic product advanced 2.0 percent year-on-year in the first quarter of 2019, easing from a 2.4 percent expansion in the previous period and below market expectations of 2.1 percent, mainly due to a steeper contraction in the country's oil sector.

The oil sector shrank 2.4 percent in the three-months to March of 2019, after contracting 1.6 percent in the prior period. The country produced 1.96 million barrels of crude oil per day, lower than 1.98 mbpd in the same period a year earlier. As a result, the oil sector accounted for 9.1 percent of GDP compared to 9.6 percent a year ago. 

The non-oil sector rose 2.5 percent, slowing from a 2.7 percent growth in the prior quarter. 

Output increased at a softer pace for manufacturing (0.8 percent from 2.4 percent in Q4 2018); internal trade (0.8 percent from 1 percent); information and communication (9.5 percent from 13.2 percent) and education. Also, production fell further for public administration (-14.2 percent from -0.3 percent); financial and insurance (-7.6 percent from -1.8 percent) and mining and quarrying (-2.3 percent from -1.2 percent). On the other hand, output advanced faster for agriculture (3.2 percent from 2.5 percent); electricity, gas, steam and air conditioning supply (8.5 percent from 0.9 percent); water supply, sewerage, waste management (3.8 percent from 1.8 percent); construction (3.2 percent from 2 percent); accommodation and food services (4.2 percent from 2.1 percent); professional, scientific and technical services (1.7 percent from 0.5 percent) and administrative and support services (1.4 percent from 0.8 percent). Additionally, real state activities rebounded 0.9 percent, after declining 3.8 percent. 

On a quarterly basis, the economy shrank 13.8 percent, after a 5.3 percent growth in the last quarter of 2018. It was the steepest contraction in GDP since the March quarter of 2016.

Nigeria's central bank has forecast growth of 3 percent for 2019.



Wednesday May 15 2019
Nigeria Inflation Rate Rises to 11.37% in April
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Nigeria increased to 11.37 percent in April 2019 from 11.25 percent in the prior month. It is the highest inflation rate since January, amid a surge in food prices.

Year-on-year, prices rose faster mostly for food (13.70 percent vs 13.45 percent in March) and housing & utilities (7.25 percent vs 7.19 percent). On the other hand, inflation softened for clothing & footwear (9.95 percent vs 10 percent); transport (9.24 percent vs 9.39 percent); furnishings (9.43 percent vs 9.49 percent); education (9.32 percent vs 9.46 percent); health (9.56 percent vs 9.63 percent); miscellaneous goods & services (8.85 percent vs 9.06 percent); restaurants & hotels (8.66 percent vs 8.82 percent) and recreation & culture (8.42 percent vs 8.56 percent). Meantime, cost was almost the same for alcoholic beverages, tobacco & kola (10.33 percent vs 10.30 percent).

Annual core inflation, which excludes price of volatile agricultural products, fell to 9.28 percent in April from 9.46 percent in March, hitting its lowest level since January 2016.

On a monthly basis, consumer prices inched up 0.94 percent, following a 0.79 percent rise in the previous month. It is the highest monthly inflation since last August.