Nigeria’s Economy Shows Signs of Recovery
By Modupe Gbadeyanka
There are strong indications that the Nigerian economy will begin to crawl back into stability after spending last year in recession.
A latest report by FSDH Research indicates that Nigeria, one of the biggest economies in Africa, is already showing signs of positive outlook and recovery.
Recall that in 2016, Nigeria was severely hit by the drop in the crude oil price and crude oil production, which depleted its external reserves and foreign earnings.
The economy officially entered into a recession in Q2 2016 following the release of the Gross Domestic Product (GDP) figures showing two consecutive quarters of GDP contraction.
But FSDH Research in its latest report says the Nigerian economy is showing strong signs of recovery. The recovery seems to be coming on the back of the recent increase in crude oil price, the increase in crude oil production in Nigeria and the Central Bank of Nigeria’s (CBN) continued supply of foreign exchange to both retail and corporate users.
The Purchasing Managers’ Index (PMI) report of the CBN shows that both the Composite PMI and the Production level in the manufacturing sector improved in March 2017.
Although the Composite PMI in March 2017 at 47.7 points was below the 50 point level (which suggests a decline in activities), it was an improvement from the month of February 2017 figure of 44.6 points.
The Index for the production level in the manufacturing sector at 50.8 points is however higher than the 50 point level (which suggests an improvement). The monthly rates of increase in both the Composite PMI and the Production level were the second highest in two years and the highest since
Analysts’ consensus is that the inflation rate will continue to trend downward in 2017. This means that the purchasing power of Nigerians should improve and stimulate demand for both consumer and industrial goods.