As the year begins, it is pertinent to take a critically look at how the economy has fared in 2017 and the outlook for 2018.
Nigeria existed its first recession in 25 year as the economy expanded by the expanded by 0.55 percent and 1.4 percent in the second and third quarter of 2017, according to the National Bureau of Statistics (NBS).
Also, inflation fell to 15.90 percent in November 2017, from 18.90 percent as at January.
The economic recovery was underpinned by a rebound in oil production due to the relative peace in the Niger Delta region and foreign exchange stability as a result of the introduction of Investors’ and Exporters’ (I and E) Window by the central bank and the subsequent liberalization of the foreign exchange market.
According to a December 14 report by the CBN, the country’s external reserve stood at $37.15 billion, representing a 44 percent increase from the $25.84 billion recorded at the beginning of the year.
The foreign exchange stability impacted positively on the performance of the bourse.
Nigerian Stock Exchange (NSE) All Share Index (ASI) returned 43 year to date (YTD), to become the second best performer in the world for 2017, after Argentina.
Investor confidence has been restored after currency controls policy put in place by the central bank led to capital flight in 2016.
Foreign Portfolio Investment (FPI) increased year on year by 259.14 percent to N2.77 bn in Q3 2017, according to the NBS.
The large chunk of FPI was equity as investors took advantage of attractive yields on Treasury Bills (T-bills).
However, the above economic recovery hasn’t trickled down to the pockets of the common man as vast majority of Nigerians live in penury while a decrepit infrastructure continues to undermine industralization.
According the NBS, the country’s unemployment rate increased to 18.80 percent in third quarter (Q3) of 2017 from 14.20 percent the corresponding period of 2016.
There are positive prognoses for the economy as international ratings agency are betting that a combination of sustained foreign exchange stability and implementation of coherent macroeconomic policies could lead to a revival of economic growth.
Fitch ratings, United Kingdom-based rating agency has said that forecast growth for the country in 2018 would be 2.6 per cent, which is higher than the 2.10 percent growth projections for the economy than the International Monetary Fund (IMF). The World Bank had projected a growth rate of 1 percent.
However, the ratings agency said that a delay in the passage of the 2018 budget and a nebulous foreign exchange policy could undermine the above economic recovery.
While Nigeria is Africa’s largest economy with a GDP of $492 bn, it is only experiencing economic growth and not development.