FRI, JANUARY 11 2019-theG&BJournal- ‘’The odds are stacked in our favour this year,’’ one CEO of a tech start-up, told theG&BJourrnal, ‘’the opportunities are there to harness but we still need a government committed to reforms to help us navigate,’’ he added.
He was speaking to the forecast of various agencies including the World Bank (WB) who yesterday called a 2.2 percent growth for the country for 2019.
The great shadow over the Nigerian economy last year (2018) was the fear that the insecurity in Northern Nigeria will continue to harm the bottom line for businesses, particularly the fast moving consumer goods (FMCG) industry- an ominous challenge the federal government struggled to respond to with speed and clear conviction.
The issue of security can matter a great deal to the forecasts of analysts, but most have stayed with the conviction that growth will stay positive despite the challenge.
With a GDP forecast of 2.2 percent and 2.5 percent by the WB and RenCap respectively, business executives say it is hard to see businesses not growing in 2019.
Indeed, by our reckoning we will see effect of the macro-economic stability on the micro-economy where average Nigerians can feel the impact of the growth in the economy. Prices of goods and services are expected to be stable, more jobs to be created by the economy with investments in the agriculture sector coming on strongly.
The positive signs are equally underscored by the convictions that inflation will reach single digits and that oil prices will remain robust and stable through the year.
Inflation fell short of the Central Bank of Nigeria target of 6-9pecent in 2018 but it is gradually heading towards the direction of the single-digit even though most analysts expect inflation to average 12.2% in 2019.
We expect the Bonny Light to trade sideways in a USD60-65 pbl range and we suspect a more accommodative liquidity environment and lower fixed income yields should support the recovery in the stock market.
The low rate environment in developed countries, coupled with accommodative liquidity conditions, should underpin sustained capital flows into emerging markets and Nigeria, which will help accumulate further FX reserves.
We also see FX reserves increasing to USD55bn in late 2019 in a base scenario. Foreign Exchange Reserves in Nigeria increased to 43230 USD Million in December from 41990 USD Million in November of 2018. We still feel the exchange rate will hover around N360-362 to the dollar in 2019 if the oil price remains robust, yields in developed countries low and global liquidity conditions favourable.
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