An undeniable feeling of disappointment lingered across Nigerian markets on Tuesday following reports of the nation’s first quarter GDP growth of 2017 contracting by 0.52% year-on-year.
Although this economic contraction may weigh heavily on sentiment moving forward, it should be kept in mind that it still remains the best performance seen in four quarters. With many sectors of the Nigerian economy turning positive, the overall outlook still looks encouraging with the bullish impacts likely to be realized in the second and third quarter of this year.
The Central Bank of Nigeria has made the logical decision to maintain key interest rates at 14% as the nation stabilizes and continues its ongoing quest to diversify beyond relying on oil exports. With Nigeria’s GDP for the first quarter of 2017 still in recessionary territory, the damage of depreciating oil prices still lingers on with social economic issues, soft domestic data and inflation exposing the nation to downside risks.
Although inflation has displayed subtle signs of stability this year, and April’s Purchasing Managers Index has highlighted a rebound in the business activity, there will be an increasing focus on GDP growth. Parliament has already approved a 21% budget hike to boost the economy while the central bank is tackling foreign exchange woes which should support the nation in the longer term. I believe that the hardship and pressure Nigeria continues to face may aid its evolution, with an end result that may shock the global arena.