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.




Tuesday April 16 2019
Nigeria Inflation Rate Hits 7-Month Low of 11.25%
National Bureau of Statistics | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Nigeria's annual inflation rate edged down to 11.25 percent in March 2019 from 11.31 percent in the previous month. It is the lowest inflation rate since August last year, as prices rose slightly less in most of categories.

Year-on-year, inflation slowed a bit for food (13.45 percent vs 13.47 percent in February); housing & utilities (7.19 percent vs 7.24 percent); transport (9.39 percent vs 9.57 percent); furnishings & household equipment maintenance (9.49 percent vs 9.59 percent); education (9.46 percent vs 9.64 percent); health (9.63 percent vs 9.69 percent); miscellaneous goods & services (9.06 percent vs 9.25 percent); restaurants & hotels (8.82 percent vs 9.04 percent); alcoholic beverages, tobacco & kola (10.30 percent vs 10.32 percent) and recreation & culture (8.56 percent vs 8.66 percent). 

In contrast, cost advanced further for clothing & footwear (4.08 percent vs 4.05 percent) and communication (7.51 percent vs 7.43 percent).

Annual core inflation, which excludes price of volatile agricultural products, dropped to 9.46 percent in March from 9.80 percent in February, hitting its lowest level since January 2016.

On a monthly basis, consumer prices went up 0.79 percent, following a 0.73 percent gain in the previous month. Prices continued to advance mainly for food (0.88 percent vs 0.82 percent); housing & utilities (0.64 percent vs 0.51 percent); clothing & footwear (0.72 percent vs 0.71 percent) and transport (0.69 percent vs 0.68 percent).


Tuesday March 26 2019
Nigeria Cuts Key Interest Rate to 13.5%
Central Bank of Nigeria | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Central Bank of Nigeria decided to cut its benchmark interest rate by 50 bps to 13.5% on March 26th 2019, mainly to stimulate the economy. The move surprised markets who had expected the rate to remain steady at 14% and marks the first rate cut since November 2015. Six out of the eleven members of the monetary policy committee voted to reduce the current monetary stance. In February 2019, the annual inflation edged down to 11.3% from 11.4% in January, but still above the Bank's target of 6-9%. Policymakers added that the economy is projected to grow between 2.7% and 3% in 2019.

Excerpts from the Statement by the Central Bank of Nigeria:

The Committee observed the tepid output growth in 2018, but noted with satisfaction that it strengthened in the last quarter of 2018 as well as the positive forecast for 2019. Output data from the National Bureau of Statistics (NBS) indicate that real Gross Domestic Product (GDP) grew by 2.38 per cent in Q4 2018 from 1.81 and 2.11 per cent in the previous quarter and corresponding period of 2017. The major impetus for growth came from the non-oil sector, which grew by 2.7 per cent in Q4 2018, while the oil sector contracted by 1.62 per cent. Available data on key macroeconomic indicators for output growth in the first quarter of 2019, and forecasts for the rest of the year, suggests continued positive outcomes. 

The Committee also noted the continued moderation in inflation as headline inflation (year-on-year) declined further to 11.31 per cent in February 2019 from 11.37 and 11.44 per cent in January 2019 and December 2018, respectively. The decrease in headline inflation was driven mainly by food inflation, which declined to 13.47 per cent in February 2019 from 13.51 per cent in January 2019, while core inflation declined marginally to 9.80 per cent from 9.91 per cent in the previous month. 

It commended the recent upsurge in capital inflows into the economy, noting this to be a demonstration of sustained confidence by the foreign investor community in the Nigerian economy. The Committee was, however, not unmindful of developments in the global economy, noting the recent slowdown in growth in some advanced economies and the dovish stance of some major central banks as an early warning sign of broader macroeconomic vulnerabilities.

The Committee also noted that having achieved a relatively stable exchange rate with price stability, it is imperative that monetary policy should explore the next steps necessary for enhancing growth, reducing unemployment and diversifying the base of the economy. It further observed that per capita income growth is very negligible, while aggregate demand remains weak. Aggregate output also remains below the potential output level, implying sufficient headroom for noninflationary growth. This new direction has, therefore, become imperative against the backdrop of the aftermath of the general national elections and strong inflow of foreign direct and portfolio investments into the economy. 

In its consideration of the best monetary policy option, the Committee noted the need for all agencies of Government to work hard, not only in consolidating the growth so far achieved, but also in ensuring that appropriate policies are put in place and implemented to create jobs on a mass scale and diversify the economy in a proper direction. In doing this, the policy options facing the MPC at this meeting is a decision between retention of the current stance of monetary policy or a slight loosening of the policy rate, backed by the substantial stability of the major macroeconomic indicators. The Committee felt that given the relative stability in the key macroeconomic variables, there is the need to signal a new direction that is pro-growth. 

In summary, the MPC decided by a vote of 6 (six) out of the eleven (11) members to:
1. Adjust the MPR by 50 basis points from 14.00 to 13.50 per cent;
2. Retain the asymmetric corridor of +200/-500 basis points around the MPR;
3. Retain the CRR at 22.5 per cent; and
4. Retain the Liquidity Ratio at 30 per cent. 



Friday March 15 2019
Nigeria Inflation Rate Falls Further in February
National Bureau of Statistics | Joana Ferreira | joana.ferreira@tradingeconomics.com

Nigeria's annual inflation rate dropped to 11.31 percent in February 2019 from 11.37 percent in the previous month, as prices rose at a slower pace for all categories.

Food inflation fell to 13.47 percent in February from 13.51 percent in the previous month. In addition, prices rose at a softer pace for: housing & utilities (7.24 percent vs 7.35 percent); clothing & footwear (10.08 percent vs 10.14 percent); transport (9.57 percent vs 9.80 percent); furnishings & household equipment maintenance (9.59 percent vs 9.70 percent); education (9.64 percent vs 9.70 percent); health (9.69 percent vs 9.81 percent); miscellaneous goods & services (9.25 percent vs 9.40 percent); restaurants & hotels (9.04 percent vs 9.20 percent); recreation & culture (8.66 percent vs 8.71 percent); and communication (7.43 percent vs 7.48 percent).

Annual core inflation, which excludes price of volatile agricultural products, edged down to 9.8 percent in February from 9.9 percent in January.
 
On a monthly basis, consumer prices went up 0.7 percent, the same pace as in January.


Tuesday February 12 2019
Nigeria Q4 GDP Annual Growth Rate Strongest Since 2015
National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

The economy of Nigeria advanced 2.4 percent year-on-year in the last quarter of 2018, following a 1.8 percent expansion in the previous period and beating market expectations of a 2.1 percent gain. It was the highest growth rate since the third quarter of 2015, as the non-oil sector increased further and the oil sector contracted less. On a quarterly basis, the economy expanded 5.3 percent, lower than a 9.5 percent in the prior quarter.

The oil sector shrank 1.6 percent in the fourth quarter of 2018, after contracting 2.9 percent in the prior period. The country produced 1.91 million barrels of crude oil per day, lower than 1.95 mbpd in the same period a year earlier. As a result, the oil sector accounted for 7.1 percent of GDP compared to 7.4 percent a year ago.

The non-oil sector rose 2.7 percent, higher than a 2.3 percent growth in the third quarter. 

Output increased further for information and telecommunication (13.2 percent compared to 12.1 percent in Q3); arts, entertainment and recreation (4.2 percent compared to 2.8 percent); agriculture (2.5 percent compared to 1.9 percent); manufacturing (2.4 percent compared to 1.9 percent); and construction (2.1 percent compared to 0.5 percent). Also, output rebounded for education (0.4 percent compared to -0.4 percent) and contracted less for mining and quarrying (-1.2 percent compared to -2.8 percent); financial and insurance (-1.8 percent compared to -4.8 percent); public administration (-0.3 percent compared to -1 percent) and social services (-0.6 percent compared to -0.7 percent). On the other hand, growth slowed for transportation and storage (9.5 percent compared to 12 percent); food and accommodation services (2.1 percent compared to 2.7 percent); electricity, gas, steam and air conditioning supply (1 percent compared to 18.3 percent); and water supply, sewerage, waste management and remediation (1.9 percent compared to 2.3 percent). Additionally, real estate activities declined faster (-3.9 percent compared to -2.7 percent) while internal trade advanced at the same pace (1 percent, the same as in Q3).

On a quarterly basis, the economy expanded 5.3 percent, lower than a 9.5 percent in the prior quarter. 

In 2018, the Nigerian economy grew 1.9 percent, quickening from 0.8 percent in 2017. It is the fastest expansion since 2015.


Tuesday January 22 2019
Nigeria Holds Key Interest Rate at 14%
Central Bank of Nigeria | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The Central Bank of Nigeria decided unanimously to keep the benchmark interest rate steady at 14 percent on January 22nd 2019, as widely expected. The last time policymakers changed rates was in July 2016, when they lifted the monetary rate by 200 bps. The Committee voiced concerns about inflationary pressures in the first half of the year, amid an increase in spending ahead of general elections and disruptions caused by recent flooding. In December, the annual inflation hit a 7-month high of 11.44% from 11.28% in November, well above the Bank’s target of 6.0%–9.0%. The Nigerian economy is projected to expand 2.28% in 2019.

Excerpts from the Statement by the Central Bank of Nigeria:

The Committee noted with satisfaction, the performance of the economy in 2018, highlighting the achievements in key macroeconomic indicators in the face of global uncertainties and domestic challenges. In particular, it noted the stability in the exchange rate, stable accretion to external reserves, moderation in inflation and the low but gradual improvement in real GDP growth in the last six consecutive quarters commencing from Q2 2017. The MPC noted that given global economic conditions and the risk confronting emerging markets and developing economies in recent times, as well as the limited productive capacity of the economy, the managed float foreign exchange management regime of the CBN has delivered the most optimal results when compared with other emerging markets in recent times. Consequently, capital flows into the domestic economy has continued unabated after an initial lull. 

Forecasts for key macroeconomic indicators in 2019 portend a positive outlook for the domestic economy. Output growth is expected to be driven by fiscal stimulus from increase in oil and non-oil receipts to support the Federal Government’s Economic Recovery and Growth Plan. The economy is projected to grow by 2.0 per cent by the IMF, 2.2 per cent by the World Bank and 2.28 per cent by the CBN. Key headwinds to these forecasts, however, are softening oil prices, persistent security challenges arising from insurgency in the North East and herdsmen attack in some parts of the country and perceived political risks associated with the 2019 general elections. The outlook for inflation in the first half of 2019 is mixed, with the expectation of an increase in the near-term before a gradual decline towards the mid-year. Inflation is expected to rise marginally amidst palpable tailwinds, which include increased spending preparatory to the 2019 general elections and continued disruptions to the food supply chain in the insurgency prone areas and herdsmen attack regions of the country. 

In the light of the observed risk confronting the economy, including the global and domestic inflationary pressures, which have intensified the risk of currency depreciation, the MPC was of the view that a loosening option was very remote. Weighing the balance of its judgement on price stability conducive to growth, the MPC felt that tightening would result in the loss of the gains so far achieved, noting that this may drive the banks to reprice their assets; thus increasing the cost of credit as well as elevating credit risk in the economy. It will also worsen the position of non-performing loans of the banks. The Committee also felt that tightening would dampen investments and hamper improvements in output growth, given the already fragile growth performance so far achieved.

In summary, the MPC decided by a vote of all eleven (11) members to keep the policy parameters unchanged from their current levels.
1. Retain the MPR at 14 per cent;
2. Retain the asymmetric corridor of +200/-500 basis points around the MPR;
3. Retain the CRR at 22.5 per cent; and
4. Retain the Liquidity Ratio at 30 per cent. 



Wednesday January 16 2019
Nigeria December Inflation Rate at 7-Month High of 11.44%
National Bureau of Statistics Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The annual inflation rate in Nigeria rose to 11.44 percent in December of 2018 from 11.28 percent in the previous month. It is the highest inflation rate since May, as prices continued to advance mainly for food and housing & utilities.

Year-on-year, prices continued to advance for food & non-alcoholic beverages (13.51 percent vs 13.26 percent in November), mostly led by food (13.56 percent vs 13.30 percent), of which potatoes, yam and other tubers; bread & cereals; fish; milk, cheese and eggs; vegetables, fruits; oils & fats and meat; housing & utilities (7.43 percent vs 7.34 percent) and clothing & footwear (10.12 percent vs 9.97 percent). Additional upward pressure came from cost of: furnishings (9.76 percent vs 9.69 percent); education (9.80 percent vs 9.78 percent); health (9.81 percent vs 9.74 percent); alcoholic beverages, tobacco & kola (10.21 percent vs 9.96 percent); communications (7.43 percent vs 7.36 percent) and recreation & culture (8.72 percent vs 8.56 percent).

In contrast, inflation slowed for transport (10.08 percent vs 10.29 percent) and miscellaneous goods & services (9.58 percent vs 9.66 percent).

Annual core inflation which excludes price of volatile agricultural products stood at 9.8 percent in December, unchanged from November.

On a monthly basis, consumer prices went up 0.74 percent, following a 0.80 percent increase in the prior month.


Friday December 14 2018
Nigeria Annual Inflation Rate Rises to 11.28% in November
National Bureau of Statistics | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in Nigeria rose to 11.28 percent in November of 2018 from 11.26 percent in the previous month. Prices advanced faster mainly due to higher cost of food and housing and utilities.

Year-on-year, prices increased further food & non alcoholic beverages (13.26 percent compared to 13.24 percent in October), mainly driven by food (13.30 percent compared to 13.28 percent); housing & utilities (7.34 percent compared to 7.28 percent); health (9.74 percent compared to 9.70 percent); restaurants & hotels (9.45 percent compared to 9.42 percent); recreation & culture (8.56 percent compared to 8.38 percent) and communication (7.36 percent compared to 7.29 percent).

Meanwhile, cost slowed for clothing & footwear (9.97 percent compared to 9.98 percent); transport (10.29 percent compared to 10.37 percent); furnishings & household equipment maintenance (9.69 percent compared to 9.72 percent); education (9.78 percent compared to 9.85 percent) and miscellaneous goods & services (9.66 percent compared to 9.76 percent).

Annual core inflation which excludes price of volatile agricultural products fell to 9.79 percent in November from 9.88 percent in October.

On a monthly basis, consumer prices went up 0.8 percent, after rising 0.7 percent in the prior month.