Economy
Drop in Economic Growth Worries FG
By Dipo Olowookere
Federal government has expressed concerns over the slower growth recorded by the nation’s economy in the second quarter of 2018.
On Monday, the National Bureau of Statistics (NBS) disclosed that the Gross Domestic Product (GDP) grew by 1.50 percent in Q2 2018, lower than the 1.95 percent in the Q1 2018.
Reacting to this, Minister of Budget and National Planning, Mr Udo Udoma, explained that this was mainly due to the contraction in the Crude oil and Gas sectors, which was caused by some production issues already being addressed by Nigerian National Petroleum Corporation (NNPC).
For instance, average crude oil production was only 1.84 million barrels/day in Q2 2018 as opposed to an average production of 2 mil barrels/ day in Q1 2018, expressing confidence that once these issues are addressed, Nigeria should be able to achieve positive growth in the oil and gas sector.
However, the Minister said government is encouraged by the continuing growth recorded in the non-oil sector, which grew by 2.05 percent in the period under review.
This, he noted, was evidence that the implementation of the targeted policies and programs of the Economic Recovery and Growth Plan (ERGP) was yielding positive results.
Mr Udoma said that he is happy to see that the Nigerian economy has continued to register positive growth in the first and second quarters of the year in spite of the security and other challenges faced by the country.
He emphasized that the focus of the Economic Recovery and Growth Plan (ERGP) is on diversifying the economy away from dependence on the oil and gas sector and was encouraged that efforts are yielding fruits by the continuing growth in the non-oil sector..
Mr Udoma noted that the 2.05 percent growth in the non-oil sector represents the strongest growth in the non-oil GDP since the fourth quarter of 2015.
According to the stats office, the non-oil growth was driven by Transportation (road, rail water and air).
Growth in Transportation grew by 21.76 percent, supported by Construction 7.66 percent and Electricity 7.59 percent; the three priority areas of the ERGP.
Other non-oil sectors that drove growth in Q2 2018 included Telecoms which grew by 11.51 percent, Water supply and Sewage 11.98 percent and Broadcasting by 21.92 percent.
However, the Oil and Gas sector contracted by 3.95 percent in Q2 2018 compared with a growth rate of 14.77 percent recorded in Q1 2018 and 3.53 percent in Q1 2017.
The Minister emphasized that the Nigerian economy needs growth from both the oil, as well as the non-oil sectors, to achieve its Economic Recovery and Growth Plan (ERGP) growth targets.
He said another area of concern for government was the slightly weaker growth in the Agriculture sector which slowed to 1.19 percent in the second quarter in 2018 compared with 3 percent in the first quarter of 2018.
This, he said, was partly attributable to security challenges mainly in the north-east and north-central zones of the country.
These security challenge affected activities of farmers with impact on commodity output; but the Minister indicated that the various measures being taken by government to tackle the situation is already reducing incidents of violent conflicts & other disruptions to farming activity.
The Minister said he is happy to see that Industry has continued to maintain a positive growth rate as a result of the performance of Manufacturing and Solid minerals which retained positive growth of 0.68 percent and 5.24 percent respectively in the second quarter of 2018.
Also, the Services sector recorded its best GDP performance in nine quarters, growing by 2.12 percent in the second quarter of 2018 compared to a contraction of 0.47 percent in the first quarter of the year and of -0.85 percent in second quarter of 2017.
Mr Udoma expressed that he was encouraged by these GDP growth results which he said is also consistent with improvements in other indicators including inflation and capital inflows, amongst others.
According to the NBS, headline inflation has consistently declined every month since January 2017 through July 2018 from 18.72 percent to 11.14 percent.
The consecutive disinflation year on year, which is the eighteenth in a row, has resulted in the lowest rate of inflation since June 2016.
He was also happy to note that the Nigerian economy has continued to attract significant capital inflows, which stood at $5.5 billion in the second quarter of 2018, representing a 207.62 percent increase compared to the second quarter of 2017.
While capital importation declined slightly in the second quarter of 2018, the total for the first half of 2018 at $11.8 billion represents the highest half year capital importation since 2014, indicating increasing confidence in the Nigerian economy, he pointed out.
The Minister expressed optimism that as government intensifies its activities in the implementation of the Economic Recovery and Growth Plan, the economy will sustain this growth momentum.
He conceded that, whilst the nation still has some ways to go to achieve the target growth rates of the ERGP, these continuing positive results are signs that the country was moving in the right direction.
Mr Udoma reiterated the commitment of the present administration to turn #Nigeria around to become a productive country where citizens “grow what we eat, consume what we make and use what we produce,” thereby providing jobs for our teeming population.
By Adedapo Adesanya
Energy stocks influenced the 4.76 per cent loss recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, December 5.
The culprits were the duo of 11 Plc and Nipco Plc,with the former shedding N32.17 to end at N291.83 per share compared with the previous day’s N324.00 per share, and the latter down by N21.00 to sell at N195.00 per unit versus the previous session’s N216.00 per unit.
Consequently, the NASD Unlisted Security Index (NSI) slumped by 170.16 points to 3,401.37 points from 3,571.53 points and the market capitalisation lost N101.81 billion to close at N2.035 billion from the N2.136 trillion quoted in the preceding session.
The OTC securities exchange suffered the decline yesterday despite the share prices of three companies closing green.
Central Securities Clearing System (CSCS) Plc was up by N1.80 to close at N39.80 per share compared with Thursday’s price of N38.00 per share, Air Liquide Plc appreciated by N1.09 to N11.99 per unit from N10.90 per unit, and FrieslandCampina Wamco Nigeria Plc grew by 78 Kobo to N56.57 per share from N55.79 per share.
During the session, the volume of transactions rose by 6,885.3 per cent to 18.2 million units from 4.3 million units, the value of transactions ballooned by 10,301.7 per cent to N389.7 million from N347.2 million, but the number of deals declined by 29.7 per cent to 26 deals from 37 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the day as the most traded stock by value on a year-to-date basis with 5.8 billion units worth N16.4 billion, followed by Okitipupa Plc with 170.4 million units valued at N8.0 billion, and Air Liquide Plc with 507.5 million units worth N4.2 billion.
InfraCredit Plc also finished the day as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units worth N524.9 million.
By Adedapo Adesanya
The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.
The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.
Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.
Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.
As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.
However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.
As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.
With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.
Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.
Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market was up on Friday on increasing expectations the US Federal Reserve will cut interest rates next week, which could boost economic growth and energy demand.
Brent futures rose by 49 cents or 0.8 per cent to $63.75 per barrel and the US West Texas Intermediate (WTI) futures expanded by 41 cents or 0.7 per cent to $60.08 per barrel.
Investors digested a US inflation report and recalibrated expectations for the Federal Reserve to reduce rates at its December 9-10 meeting.
US consumer spending increased moderately in September after three straight months of solid gains, suggesting a loss of momentum in the economy at the end of the third quarter as a lackluster labor market and the rising cost of living curbed demand.
Traders have been pricing in an 87 per cent chance that the US central bank will lower borrowing costs by 25 basis points next week, according to CME Group’s FedWatch Tool.
Investors also focused on news from Russia and Venezuela to determine whether oil supplies from the two sanctioned members of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) will increase or decrease in the future.
The failure of US talks in Moscow to achieve any significant breakthrough over the war in Ukraine has helped to boost oil prices so far this week.
A loss of Venezuelan oil production in case of a US military intervention will materially impact global benchmark prices as the market will have to replace Venezuela’s heavy crude.
Venezuela is estimated to pump about 1.1 million barrels per day of crude oil at present, so if the US-Venezuela tension escalation into an invasion in the South American country, this volume of crude would be at risk.
Reuters reported that the Group of Seven countries and the European Union are in talks to replace a price cap on Russian oil exports with a full maritime services ban in a bid to reduce the oil revenue that helps finance Russia’s war in Ukraine.
Any deal that could lift sanctions on Russia, the world’s second-biggest crude producer after the US, could increase the amount of oil available to global markets, weakening prices.
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