Wednesday September 27 2017
Nigeria Holds Interest Rate Steady at 14%
Central Bank of Nigeria | Stefanie Moya | stefanie.moya@tradingeconomics.com

The central bank of Nigeria left its benchmark interest rate unchanged at 14 percent on September 26th 2017, in line with market expectations. Policymakers showed concerns regarding high food prices and noticed the economic recovery is still fragile. Six of the seven members of the monetary policy committee voted to hold rates, while one voted for a cut.

Excerpts from the Statement by the Central Bank of Nigeria:

Available data and forecast of key macroeconomic variables indicate a relatively positive outlook, predicated on existing policy initiatives including the ERGP. Other potential drivers of economic recovery are; the expected increase in government revenue arising from favourable crude oil prices, stable output, and general improvements in the non-oil sector, especially, agriculture, industry and construction. The intervention by the CBN in the real sector is expected to continue to yield positive results in terms of output and lower consumer prices.

The Committee, however, noted some downside risks to the overall short to medium-term positive outlook for the economy. These include; flooding which displaced farming communities and political agitations. On the external front, the hawkish policy stance in the United States, rising geo-political tensions and sluggish output recovery in the Euro-area and Japan, could slowdown the momentum of global output growth, with significant spillovers to emerging markets and developing countries, including Nigeria.

The Committee, however, expressed concern on the sustained pressure on food prices, noting risks posed by floods, strikes and insurgencies in various parts of the country to food production and distribution. Regarding the tepid turnaround in economic activities in the second quarter of 2017, the Committee emphasized that the employment gains of recovery were still minimal, noting that a number of important job elastic sub-sectors were still weak and may require more fiscal support to regain traction. 

With respect to loosening, the Committee believed that although while it would make it more attractive for Nigerians to acquire assets at cheaper prices, thus increasing their net wealth, and therefore stimulate spending as confidence rises, it nevertheless, felt constrained that loosening at this time would exacerbate inflationary pressures and worsen the exchange rate and inflationary conditions. The Committee also felt that loosening will further pull the real rate deeper into negative territory as the gap between the nominal interest rate and inflation widens.

On the argument to hold, the Committee believes that the effects of fiscal policy actions towards stimulating the economy have begun to manifest as evident in the exit of the economy from the fifteen-month recession. Although still fragile, the fragility of the growth makes it imperative to allow more time to make appropriate complementary policy decisions to strengthen the recovery. Secondly, the Committee was of the view that economic activity would become clearer between now and the first quarter of 2018, when growth is expected to have sufficiently strengthened and gains in receding inflation, very obvious. The most compelling argument for a hold was to achieve more clarity in the evolution of key macroeconomic indicators including budget implementation, economic recovery, exchange rate, inflation and employment generation.

In summary, the MPC decided to:
(i) Retain the MPR at 14.0 per cent;
(ii) Retain the CRR at 22.5 per cent;
(iii) Retain the Liquidity Ratio at 30.0 per cent
(iv) Retain the Asymmetric corridor at +200 and -500 basis points around the MPR.





Friday September 15 2017
Nigeria Inflation Rate Falls Slightly to 16.01% in August
National Bureau of Statistics | Marta Dubiel | marta.dubiel@tradingeconomics.com

Consumer Prices in Nigeria increased 16.01 percent year-on-year in August of 2017, following a 16.05 percent rise in July and in line with market expectations of 16 percent. It is the seventh consecutive decline in inflation and a new low since May of 2016. The highest increases were seen in prices of clothing materials and articles of clothing, garments, passenger transport by air, motorcycles, shoes and other footwear. On the other hand, food inflation edged down to 20.25 percent from 20.28 percent in July which was the highest since the new CPI series began in 2009.

Year-on-year, prices rose less for housing and utilities (9.15 percent compared to 9.56 percent in July); education (13.89 percent compared to 14.99 percent), alcoholic beverages, tobacco and Kola (9.22 percent compared to 9.50 percent) and communication (2.94 percent compared to 3.04 percent).  On the other hand, prices rose faster for transport (11.82 percent compared to 11.74 percent), clothing and footwear (15.92 percent compared to 15.77 percent) and restaurants and hotels (9.46 percent compared to 8.77 percent).

Among food items, increases were mainly seen in prices for bread and cereals, meat, fish, oils and fats, milk cheese and eggs, coffee, tea and cocoa.

Annual core inflation which excludes prices of volatile agricultural products increased to 12.30 percent from 12.21 percent in July.

On a monthly basis, consumer prices rose 0.97 percent, following a 1.21 percent increase in July. 




Tuesday September 05 2017
Nigeria Returns to Growth in Q2
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Nigerian economy advanced 0.55 percent year-on-year in the second quarter of 2017, after shrinking an upwardly revised 0.91 percent in the previous period. It is the first expansion in five quarters as the oil sector rebounded.

The oil sector went up 1.64 percent year-on-year, the first expansion since the third quarter of 2015, following an upwardly revised 15.60 percent drop in the previous period. The country produced 1.84 million barrels of crude oil per day, up from 1.81 mbpd a year earlier. As a result, the oil sector accounted for 8.89 percent of GDP compared to 8.79 percent a year earlier.

The non-oil sector advanced 0.45 percent, easing from a 0.73 percent increase in the previous period. Output growth slowed for: manufacturing (0.64 percent vs 1.36 percent in Q1); construction (0.13 percent vs 0.15 percent); water supply, sewerage, waste management and remediation (3.45 percent vs 12.63 percent) and agriculture (3.01 percent vs 3.39 percent). In addition, production declined for: transport (-6.18 percent vs 10.55 percent); trade (-1.62 percent vs -3.08 percent); accomodation and food services (-4.05 percent vs -3.96 percent); information an communication (-1.15 percent vs 2.73 percent); arts, entertainment and culture (-0.62 percent vs 11.67 percent) and real estate activities (-3.53 percent vs -3.10 percent).

In contrast, electricity, gas, steam and air conditioning (35.50 percent vs -5.04 percent) and public administration (1.63 percent vs -2.07 percent) recovered, while finance and insurance rose sharply (10.45 percent vs 0.67 percent).

On a quarterly basis, the economy expanded 3.23 percent.




Monday August 28 2017
Nigeria Inflation Rate Edges Down to 16.05% in July
National Bureau of Statistics | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in Nigeria increased 16.05 percent year-on-year in July of 2017, easing slightly from a 16.1 percent rise in June and compared to market expectations of 16 percent. It is the lowest reading since May of 2016 amid a slowdown in cost of housing and energy. On the other hand, food inflation hit the highest since the new CPI series began in 2009.

Year-on-year, prices rose less for housing and utilities (9.56 percent compared to 10.93 percent in June); transport (11.74 percent compared to 12.24 percent); education (14.99 percent compared to 16.04 percent) and alcoholic beverages and tobacco (9.5 percent compared to 9.89 percent). On the other hand, inflation rose for food (20.28 percent compared to 19.91 percent), mainly due to higher prices of bread and cereals, meat, fish, oils and fats, coffee, tea and cocoa, potatoes yam and other tubers and vegetables. Additional upward pressure came from cost of clothing and footwear (15.77 percent compared to 15.71 percent); furnishings and household equipment maintenance (12.27 percent compared to 11.25 percent); health (10.29 percent compared to 9.41 percent); miscellaneous goods and services (10.43 percent compared to 10.29 percent) and restaurants and hotels (8.77 percent compared to 8.02 percent).

Annual core inflation which excludes prices of volatile agricultural products eased to 12.21 percent from 12.46 percent in June. 

On a monthly basis, consumer prices increased 1.21 percent, below 1.58 percent in June. 


Tuesday July 25 2017
Nigeria Holds Key Rate At 14%
Joana Taborda | joana.taborda@tradingeconomics.com

The central bank of Nigeria left its benchmark interest rate steady at 14 percent on July 25th 2017, in line with market expectations, mentioning the headwind confronting the economy and global uncertainties. Six of the eight members of the monetary policy committee voted to hold rates, while two voted for a cut. The inflation slowed for 16.1 percent in June, the lowest in 13 months.

Excerpts from the Statement by the Central Bank of Nigeria:

The Monetary Policy Committee met on the 24th and 25th of July 2017, against the backdrop of a relatively improving global economy. However, protectionism in trade and immigration fragilities in the financial markets, remain the key risks to global economic stability. On the domestic front, the economy is on a path to moderate recovery with a positive short- to medium-term outlook, premised largely on fiscal stimulus and a stable naira exchange rate. Inflation expectations also appear sufficiently anchored with the current stance of monetary policy.

Notwithstanding the improved outlook for growth, the Committee assessed the implications of the uncertainties arising from the continued normalization of monetary policy by the US Fed and the implications of a strong dollar, the weak recovery of commodity prices, and the uncertainty of US fiscal policy. The Committee similarly evaluated other challenges confronting the domestic economy and the opportunities for achieving economic growth and price stability in 2017.

The Committee expressed satisfaction with the gradual but consistent decline in inflationary pressures in the domestic economy, noting its substantial base effect, continuous improvements in the naira exchange rate across all segments of the foreign exchange market, and considerable signs of improved investments inflows. The Committee welcomed the move by the fiscal authorities to engage the services of asset-tracing experts to investigate the tax payment status of 150 firms and individuals in an effort to close some of the loopholes in tax collection, towards improving government revenue. However, the Committee expressed concern about the slow implementation of the 2017 Budget and called on the relevant authorities to ensure timely implementation, especially, of the capital portion in order to realize the objectives of the Economic Recovery and Growth Plan.

The MPC thinks that easing at this point would signal the Committee’s sensitivity to growth and employment concerns by encouraging the flow of credit to the real economy. It would also promote policy consistency and credibility of its decisions. Also, the Committee observed that easing at this time would reduce the cost of debt service, which is actually crowding out government expenditure. The risks to easing however, would show in terms of upstaging the modest stability achieved in the foreign exchange market, the possible exit of foreign portfolio investors as well as a resurgence of inflation following the intensified implementation of the 2017 budget in the course of the year. The Committee also reasoned that easing would further pull the real interest rate down into negative territory.

The argument for holding is largely premised on the need to safeguard the stability achieved in the foreign exchange market, and to allow time for past policies to work through the economy. Specifically, the MPC considered the high banking system liquidity level; the need to continue to attract foreign investment inflow to support the foreign exchange market and economic activity; the expansive outlook for fiscal policy in the rest of the year; the prospective election related spending which could cause a jump in system liquidity, etc. 

In summary, the MPC decided to:
(i)  Retain the MPR at 14 per cent;
(ii) Retain the CRR at 22.5 per cent;
(iii) Retain the Liquidity Ratio at 30.00 per cent;
(iv) Retain the Asymmetric corridor at +200 and -500 basis points around the MPR.


Monday July 17 2017
Nigeria Inflation Rate Lowest In Over 1 Year
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Consumer prices in Nigeria increased 16.10 percent year-on-year in June of 2017, the least in 13 months, compared to 16.25 percent in the previous month. it was the fifth consecutive month of decline in inflation rate as non-food prices grew less.

Compared to June of 2016, prices slowed for: housing & utilities (10.93 percent vs 12.91 percent in May); clothing and footwear (15.71 percent vs 16.31 percent); transport (12.24 percent vs 13.26 percent); furniture & household equipment (11.25 percent vs 11.35 percent); education (16.04 percent vs 16.25 percent); health (9.41 percent vs 9.47 percent); alcoholic beverages, tobacco and Kola (9.89 percent vs 11.04 percent) and communication (3.28 percent vs 3.65 percent).

In contrast, food inflation hit the highest since February of 2009 (19.91 percent vs 19.27 percent) as cost rose faster for meat, bread and cereals, fish, potatoes, yam and other tubers, oils and fats, milk, cheese, eggs, coffee, tea and cocoa. Also, prices grew more of: miscellaneous goods & services (10.29 percent vs 10.09 percent); recreation and culture (9.93 percent vs 9.81 percent) and restaurants and hotels (8.02 percent vs 7.84 percent).

Annual core inflation rate eased to 12.50 percent, the lowest since March last year,  from 13.02 percent  in the previous month.

On a monthly basis, consumer prices rose 1.58 percent, compared to a 1.88 percent increase in May, as cost went up at a slower pace for: food (1.99 percent vs 2.54 percent); housing and utilities (0.74 percent vs 0.89 percent); clothing and footwear (1.59 percent vs 1.69 percent); recreation and culture (0.66 percent vs 1.32 percent); miscellaneous goods and services (1.14 percent vs 1.20 percent); alcoholic beverages, tobacco and Kola (0.75 percent vs 0.96 percent) and communication (0.25 percent vs 0.39 percent). 


Thursday June 15 2017
Nigeria Inflation Rate Slows To 1-Year Low In May
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Nigeria's consumer prices increased 16.25 percent year-on-year in May of 2017, easing from a 17.24 percent rise in the previous month. The inflation rate fell for the fourth straight month to the lowest in 12 months, led by a general slowdown in prices. Annual core inflation rate was 13.02 percent, the lowest since March last year. On a monthly basis, consumer prices increased 1.88 percent.

Compared to May of 2016, prices rose less for: food (19.27 percent vs 19.30 percent in April); housing and utlities (12.91 percent vs 16.05 percent); clothing and footwear (16.31 percent vs 17.10 percent); transport (13.26 percent vs 14.91 percent); furniture and household equipment (11.35 percent vs 12.84 percent); education (16.25 percent vs 18.19 percent); health (9.47 percent vs 10.66 percent); miscellaneous goods and services (10.09 percent vs 12.16 percent); communication (3.65 percent vs 3.96 percent) restaurants and hotels (7.84 percent vs 9.08 percent) and alcoholic beverages, tobacco and kola (11.04 percent vs 12.78 percent).

Annual core inflation rate eased to 13.02 percent from 14.75 percent in the previous month, reaching the lowest since March last year.

On a monthly basis, consumer prices rose 1.88 percent, accelerating from a 1.60 percent increase in April.


Tuesday May 23 2017
Nigeria Is Expected To Return To Growth In 2017
Joana Taborda | joana.taborda@tradingeconomics.com

The Nigerian economy contracted in 2016 for the first time in 25 years after militant attacks in the Niger River delta destroyed oil pipelines and slump in oil prices led to a decline in government revenues and a shortage of foreign reserves. The economy is expected to slowly return to growth in 2017, boosted by public investment in roads, rails, ports and the power sector and higher oil production after peace talks between the government and militant groups started this year.

Recent data suggests the Nigerian economy has bottomed out although the GDP shrank 0.52 percent year-on-year in the first three months of 2017. It was the smallest contraction in five quarters as the non-oil sector rose 0.72 percent, rebounding from a 0.33 percent drop in the previous period, boosted by a recovery in transportation, manufacturing and construction. The oil sector continued to decline but at a slower pace (-11.64 percent vs -17.7 percent in Q4) as average crude oil production rose by 0.07 million barrels per day to 1.83 million, first increase in 2 years. Yet, Nigeria's refineries processed 10 million barrels of crude oil in the first quarter, compared to 24 million in full 2016.

In addition, non-oil sector is recovering. After reaching record low of 41.9 in June of 2016, the manufacturing PMI rose to 51.1 in April of 2017 showing first expansion in factory activity so far this year. Also, the non-manufacturing PMI came in at 49.5 in April, pointing to the smallest contraction in services in sixteen straight months, as business activity and new orders rebounded and employment fell less.

Also, the inflation slowed to 17.24 percent in April, the lowest in nine months. The inflation rate spiked to double digits in 2016 after the naira slumped to record lows against the USD on lower oil prices and as the foreign exchange reserves dropped to 10-year low as the central bank tried to protect the currency. As a result, the central bank hiked the key rate two times by a total of 300bps to 14 percent. However, following the recovery in oil prices, foreign exchange reserves rose to USD 30.80 billion in April, the highest level since September of 2015. Thanks to higher oil revenues, the central bank has been able to boost foreign exchange supply in the economy and created a multiple exchange rate system, aiming to improve dollar supply and trading it at a more market-determined rate. As a result, the naira stabilized and the spread between the official rate and unofficial one has been narrowing. 




Tuesday May 23 2017
Nigeria Holds Key Rate At 14%
Central Bank of Nigeria | Joana Taborda | joana.taborda@tradingeconomics.com

The Central Bank of Nigeria held its benchmark interest rate unchanged at 14 percent at its May 2017 meeting as inflationary pressures start to ease while the economy remained in recession for the fifth quarter in the first three months of 2017. The decision came in line with market expectations.

Excerpts from the Statement by the Central Bank of Nigeria:

Available data and forecasts of key economic variables as well as the newly released Federal Government?s Economic Recovery and Growth Plan (ERGP), indicate prospects of output recovery in 2017. The Committee expects that the implementation of this plan, the new foreign exchange policy as well as the current effort by the Federal Government to restore peace in the Niger Delta region would help revive economic growth and stabilize prices. The Committee identified the downside risks to this outlook to include the possibility of a slower-than-expected rate of global economic activity, tight monetary policy stance by the U.S. Fed, resulting in strengthening U.S dollar, and low oil prices.

The Committee re-evaluated the implications for Nigeria of the continuing global uncertainties as reflected in the unfolding protectionist posture of the United States and some European countries; sustenance of the OPEC-Russian agreement to cut oil production beyond July 2017; sluggish global recovery and the strengthening U.S. dollar. 

The Committee also evaluated other challenges confronting the domestic economy and the opportunities for achieving price stability, conducive to growth in 2017. In particular, the Committee noted the persisting inflationary pressures; continuing output contraction; high unemployment rate; elevated demand pressure in the foreign exchange market; low credit to the real sector and weakening financial system indicators, amongst others. Nonetheless, members welcomed the improved implementation of the foreign exchange policy that resulted in naira?s recent appreciation. Similarly, the Committee expressed satisfaction on the release of the Economic Recovery and Growth Plan, and urged its speedy implementation with clear timelines and deliverables. On the strength of these developments, the Committee felt inclined to maintain a hold on all policy parameters. 

In summary, the MPC decided to:
(i)  Retain the MPR at 14 per cent;
(ii) Retain the CRR at 22.5 per cent;
(iii) Retain the Liquidity Ratio at 30.00 per cent;
(iv) Retain the Asymmetric corridor at +200 and -500 basis points around the MPR.


Tuesday May 23 2017
Nigerian Economy Contracts The Least In 1 Year
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The GDP in Nigeria shrank 0.5 percent year-on-year in the first quarter of 2017, following an upwardly revised 1.7 percent decrease in the previous period. It is the smallest fall in five quarters of contraction, as oil sector continued to decline although at a slower pace.

The oil sector went down 11.64 percent year-on-year, following an upwardly revised 17.7 percent drop in the previous period and marking the fifth consecutive quarter of falls. The country produced 1.8 million barrels of crude oil per day, down from 2.1 mbpd a year earlier. As a result, oil sector accounted for 8.90 percent of the GDP compared to 10.02 percent a year earlier.

The non-oil sector advanced 0.72 percent, following a 0.33 percent contraction in the previous period. Ouput rebounded significantly for transport (10.55 percent vs -5.32 percent in Q4), manufacturing (1.36 percent vs -2.54 percent in Q4) and construction (0.15 percent vs -6.03 percent in Q4). In addition, production grew faster for information and communication (2.73 percent vs 1.38 percent in Q4), water supply, sewerage, waste management and remediation (12.63 percent vs 10.76 percent in Q4) and fell less for real estate activities (-3.10 percent vs -9.27 percent in Q4), electricity, gas, steam and air conditioning (-5.04 percent vs -5.16 percent in Q4) and mining (-11.46 percent vs -17.26 percent in Q4). Meanwhile, financial and insurance (0.67 percent vs 2.68 percent in Q4) and agriculture (3.39 percent vs 4.03 percent in Q4) rose less and trade continued to shrank (-3.08 percent vs -1.44 percent in Q4). The non-oil sector accounted for 91.10 percent of the GDP, up from 89.98 percent in the first quarter of 2016.

On a quarterly basis, the economy slipped 12.9 percent compared to a downwardly revised 3.75 percent expansion in the previous quarter.