Tuesday March 21 2017
Nigeria Leaves Monetary Policy Unchanged
Central Bank of Nigeria | Deborah Neves | deborah.neves@tradingeconomics.com

The Central Bank of Nigeria held its benchmark interest rate unchanged at 14 percent at its March 2017 meeting, as expected. The inflation rate eased slightly for the first time in fifteen months to 17.78 percent in February, but remained well above the central bank target of 10 percent by 2020. Also, the economy shrank 1.5 percent in 2016, the first annual contraction in 25 years.

Excerpts from the Statement by the Central Bank of Nigeria:

The Committee re-evaluated the implications for Nigeria of the continuing global uncertainties as reflected in the unfolding protectionist posture of the United States and some European countries; sustenance of the OPEC-Russian agreement to cut oil production beyond July 2017; sluggish global recovery and the strengthening U.S. dollar.

The Committee also evaluated other challenges confronting the domestic economy and the opportunities for achieving price stability, conducive to growth in 2017. In particular, the Committee noted the persisting inflationary pressures; continuing output contraction; high unemployment rate; elevated demand pressure in the foreign exchange market; low credit to the real sector and weakening financial system indicators, amongst others.

Nonetheless, members welcomed the improved implementation of the foreign exchange policy that resulted in naira’s recent appreciation. Similarly, the Committee expressed satisfaction on the release of the Economic Recovery and Growth Plan, and urged its speedy implementation with clear timelines and deliverables. On the strength of these developments, the Committee felt inclined to maintain a hold on all policy parameters.

Besides, the Committee noted the need to create binding restrictions on growth in narrow money and structural liquidity and the imperative of macroeconomic stability to achieving price stability conducive to growth.

The Committee noted the consecutive positive contribution of agriculture to GDP in Q4 2016, a development partly traceable to the Bank’s interventions in the sector. The Committee remains optimistic that, if properly implemented, the newly released Economic Recovery and Growth Plan (ERGP) coupled with innovative, growth-stimulating sectoral policies would help fast track economic recovery.

In summary, the MPC decided to:

(i)  Retain the MPR at 14 per cent;
(ii) Retain the CRR at 22.5 per cent;
(iii) Retain the Liquidity Ratio at 30.00 per cent;
(iv) Retain the Asymmetric corridor at +200 and -500 basis points around the MPR.




Tuesday March 14 2017
Nigeria Inflation Rate Slows to 17.78% in February
National Bureau of Statistics | Deborah Neves | deborah.neves@tradingeconomics.com

Nigeria's consumer prices increased by 17.78 percent year-on-year in February of 2017, following 18.72 percent gain in the previous month. The inflation rate slowed for the first time in fifteen months, mainly due to non-food prices.

Compared to February of 2016, prices increased at a slower pace for: housing and utilities (20.4 percent from 27.2 percent in January); education (19.1 percent from 21 percent); clothing and footwear (17.4 percent from 17.9 percent); furnishings and household equipment (13.3 percent from 13.9 percent) and transport (16.8 percent from 17.2 percent).

Meanwhile, cost of food rose faster by 18.5 percent following 17.8 percent in the previous month, namely for bread, cereals, fish, meat, potatoes and wine; while increased less for imported food (19.4 percent from 21 percent). 

Annual core inflation rate edged down to 16 percent from 17.85 percent in the previous month.

On a monthly basis, consumer prices went up 1.49 percent compared with a 1.01 percent rise in the previous month, as cost rose for: food (+1.99 percent); imported food (+0.9 percent); housing and utilities (+1.02 percent); clothing and footwear (+1.04 percent) and transport (+0.99 percent).




Tuesday February 28 2017
Nigerian Economy Contracts 1.3% in Q4
National Bureau of Statistics | Deborah Neves | deborah.neves@tradingeconomics.com

The GDP in Nigeria shrank 1.3 percent year-on-year in the fourth quarter of 2016, following a 2.24 percent decline in the previous period. It was the fourth consecutive quarter of contraction as lower oil prices keep hurting the oil sector. Considering full 2016, the economy contracted 1.5 percent, following a 2.8 percent growth in 2015, the first annual contraction in 25 years.

The oil sector declined 12.38 percent year-on-year, following a 22.01 percent drop in the previous period and marking the fourth consecutive quarter of falls in the oil sector. The country produced 1.9 million barrels per day, down from 2.16 mbpd a year earlier, hurt by lower oil prices. As a result, the oil sector accounted for 7.15 percent of the GDP compared to 8.06 percent a year earlier.

The non-oil sector decreased slightly by 0.33 percent after being flat in the previous period (0.03 percent): production continued to fall for real estate (-9.27 percent from -7.37), manufacturing (-2.54 percent from -4.38 percent in the third quarter); construction (-6.03 percent from -6.13 percent), trade (-1.44 percent from -1.38 percent) and electricity, gas, steam and air conditioning supply (-5.16 percent from -6.68 percent). In addition, output rose less for agriculture (4.03 percent compared to 4.54 percent). The non-oil sector accounted for 92.85 percent of the GDP up from 91.94 percent in the fourth quarter of 2015.

On a quarterly basis, the economy expanded by 4.09 percent slowing from 8.99 percent in the previous quarter.

Considering full 2016, industrial output drove the contraction (down 8.53 percent), followed by services (down 0.82 percent) while agriculture sector expanded (up 4.11 percent). The oil sector shrank 13.65 percent, following a 5.45 percent drop in 2015, reducing the oil sector share in GDP to 8.42 percent from 9.61 percent. The country produced 1.833 million barrels a day in 2016, down from 2.13 mbpd in 2015. In addition to lower oil prices, Nigeria faced several contraints including pipeline vandalism, fuel shortages and lower electricity generation that dragged oil and industrial production down.




Wednesday February 15 2017
Nigeria Inflation Rate Highest Since September 2005
National Bureau of Statistics | Deborah Neves | deborah.neves@tradingeconomics.com

Nigeria's consumer prices increased by 18.72 percent year-on-year in January of 2017, following 18.55 percent rise in the previous month. The inflation rate accelerated for the 12th straight month to the highest since September 2005, as prices continued to rise for food and housing and utilities.

Compared to January of 2016, cost of food increased by 17.8 percent following 17.4 percent in December (namely for bread and cereals; meat, oil and fats, and fish) while prices of imported food increased slightly less (21 percent from 21.1 percent). Additional upward pressure came from: housing and utilities (27.2 percent, at the same pace as in December); education (21 percent from 21.6 percent); clothing and footwear (17.9 percent from +18.8 percent); furnishings and household equipment (13.9 percent from 13.6 percent) and transport (17.2 percent from 17.3 percent).

Annual core inflation rate edged down to 17.85 percent from 18.03 percent in the previous month.

On a monthly basis, consumer prices went up 1.01 percent compared with a 1.06 percent rise in the previous month, as cost rose for: food (+1.3 percent); imported food (+0.9 percent); housing and utilities (+0.6 percent); and clothing and footwear (+0.9 percent).


Tuesday January 24 2017
Nigeria Leaves Monetary Policy Unchanged
Central Bank of Nigeria | Deborah Neves | deborah.neves@tradingeconomics.com

The Central Bank of Nigeria hold its benchmark interest rate unchanged at 14 percent at its January 2017 meeting, saying the economy remains in recession and inflationary pressures have yet to recede. Policymakers expect the GDP to come back to growth in 2017, boosted by agriculture after the expansion of the Anchor Borrower Program while price pressures are expected to ease and the currency to stabilise.

Excerpts from the Statement by the Central Bank of Nigeria:

Conscious of the prevailing market sentiments in favour of a rate cut, the Committee reasoned that most of its decisions in 2016 were informed by the need to address the delicate balance between price stability and growth. Noting that the pressures on consumer prices were yet to abate and even as the economy continued to be in recession despite the intervention support by the Central Bank, the Committee stressed that it was not oblivious of the full ramifications of the economic challenges facing the country. The MPC was concerned that the current situation was not amenable to simplistic analyses and quick fixes such as have found expression and increased attention at different fora and the media. The domestic economic challenges which include a chronically import dependent consumption culture, lack of competitiveness of many sectors of the economy and yawning infrastructural gap, have combined with an unfavorable external environment to complicate the macroeconomic policy environment. The Monetary Authority had on many occasions, and to the extent feasible, taken extra-ordinary steps to support other policies as well as compensate for aspects of structural gaps in the economy even at the expense of its core mandate.

The Committee specifically noted the positive contribution of agriculture to GDP in the third quarter, mostly attributable to the Bank’s interventions in the sector. The Committee hopes that given the thrust of the 2017 budget and accompanying sectoral policies, output growth should resume in the short to medium term. The MPC, therefore, lends its voice to efforts for an early finalization of the 2017 Federal Budget by the authorities concerned, and the resolve to pursue a non-oil driven economy, as these will go a long way in stimulating aggregate demand and restoring confidence in the economy. The Committee also urged the authorities to seriously consider using the Public Private Partnership (PPP) model in its infrastructure development programme as a means of cushioning any possible shocks to budgeted revenue. 

The Committee further noted that inflationary pressures would begin to subside as non-oil output recovers and the naira exchange rate stabilizes. Until then, it stressed, a rate cut would worsen the inflationary conditions and undermine the current outlook for stability in the foreign exchange market. The Committee also feels that doing so would further aggravate demand pressures while undermining existing income levels in the face of the already expansionary monetary policy and increasing inflationary pressure which will make the economy unattractive for foreign and domestic investment. Given these limitations, the Committee was reluctant to lower the policy rate on this occasion but remained committed to doing so when the conditions permit. 

In summary, the MPC decided to: 
(i) Retain the MPR at 14 percent;  
(ii) Retain the CRR at 22.5 percent; 
(iii) Retain the Liquidity Ratio at 30.00 percent.


Friday January 13 2017
Nigeria Inflation Rate Highest Since October 2005
National Bureau of Statistics | Deborah Neves | deborah.neves@tradingeconomics.com

Nigeria's consumer prices increased by 18.55 percent year-on-year in December 2016, following a 18.48 percent rise in the previous month. The inflation rate accelerated for the 11th straight month to the highest since October 2005, as prices continued to rise for housing, electricity and food.

Compared to December 2015, cost of food increased by 17.4 percent from a 17.2 percent rise in November (mainly due to bread and cereals; oil and fats and fish and meat) while prices of imported food increased slightly less (+21.1 percent from +22.2 percent). Additional upward pressure came from: housing and utilities (+27.2 percent from +27.2 percent in November); clothing and footwear (+17.8 percent from +18.2 percent); furnishings and household equipment (+13.6 percent from +13.5 percent) and transport (+17.3 percent from +17.7 percent).

Annual core inflation rate advanced to 16.77 percent from 14.54 percent in the previous month.

On a monthly basis, consumer prices went up 1.08 percent compared with a 0.8 percent rise in the previous month, as cost went up for: food (+1.3 percent); imported food (+1 percent); housing and utilities (+0.5 percent); and clothing and footwear (+1 percent).


Thursday December 15 2016
Nigeria Inflation Rate Highest Since October 2005
National Bureau of Statistics | Deborah Neves | deborah.neves@tradingeconomics.com

Nigeria's consumer prices increased by 18.48 percent year-on-year in November 2016, following a 18.3 percent growth in the previous month and above market expectations of a 18.4 percent gain. The inflation rate accelerated for the 10th straight month to the highest level since at least October 2005, as prices continued to rise for housing, electricity and food. On a monthly basis, consumer prices went up 0.8 percent at the same pace as in the previous period.

Compared to November 2015, cost of food increased by 17.2 percent from a 17.1 percent growth in October (mainly for bread and cereals; oil and fats and fish and meat) and prices of imported food increased by 21.2 percent, at the same pace as in the previous month. Additional upward pressure came from: Housing and utilities (+27.2 percent from +26.9 percent in October); clothing and footwear (+18.2 percent from +17.8 percent); furnishings and household equipment (+13.5 percent from +13 percent) and transport (+17.7 percent from +18.2 percent).

Annual core inflation rate slowed to 14.54 percent from a nearly ten-year high of 18.1 percent in the previous month.

On a monthly basis, consumer prices increased 0.8 percent, the same as in October, as prices rose for: Food (+0.9 percent); imported food (+0.9 percent); housing and utilities (+0.6 percent); and clothing and footwear (+1 percent).


Tuesday November 22 2016
Nigeria Leaves Key Rate Unchanged at 14%
Central Bank of Nigeria | Mojdeh Kazemi | mojdeh@tradingeconomics.com

The central bank of Nigeria hold its benchmark interest rate steady at 14 percent at its November 2016 meeting, in an attempt to control the inflationary pressure amid foreign exchange scarcity. The inflation rate hit a fresh eleven-year high of 18.3 percent in October and the economy contracted for the third straight quarter in three months to September of 2016 due to lower prices of oil.

Excerpts from the Statement by the Central Bank of Nigeria:

The Committee assessed the fragile macroeconomic conditions and the strong headwinds confronting the economy. In particular, the Committee considered the implications of the twin deficits of current account and budget deficits, the rise of nationalist sentiments across the West and implications for national elections in France and Germany as well as the forthcoming referendum in Italy. Other considerations include the yet to be unveiled long term uncertainties of Brexit and expectations of significant shifts in US economic policy. The Committee reaffirmed the urgency of prioritizing the diversification of the economy given the emerging gloomy protectionist outlook of the global economy. 

The Committee also evaluated the impact of its July and September 2016 actions on the macroeconomy noting that while foreign exchange inflows into the economy had improved significantly in July and August, it declined after the September MPC meeting, leading to rising inflation and increasing negative real interest rates. However, outflows significantly dropped, lending credence to the propriety of the decisions of the July and September MPC meetings. 

The MPC believes that the Security agencies should sustain their checks on the activities of illegal foreign exchange operators in order to bring sanity to that segment of the market. The Committee reiterated that the extant foreign exchange regulation outlaws the trafficking of currency on the streets as some unlicensed operators currently do. Thus, to evolve an appropriate naira exchange rate that stabilizes the foreign exchange market, BDC operators must strictly observe the terms and conditions of their license. 

Available data and forecasts of key economic variables indicate that the outlook for growth and inflation in the medium term continues to be challenging. Growth is expected to remain less robust given the absence of sufficient fiscal space while the current tight stance of monetary policy and improved agricultural harvests are expected to contain further price increases and moderate price expectations as the trend has already revealed. 

The Committee assessed the relevant risks to the global and domestic economy and concluded that the risks to the economy remained highly elevated on two fronts (price and output). However, considering the importance of price stability, and being mindful of the limitations of monetary policy in influencing output and employment under conditions of stagflation, the Committee decided unanimously in favour of retaining the current stance of monetary policy, thus keeping the MPR at 14.0 per cent alongside all other policy parameters. 

In summary, all 10 MPC members voted to:

(i) Retain the MPR at 14 per cent;
(ii) Retain the CRR at 22.5 per cent;
(iii) Retain the Liquidity Ratio at 30.00 per cent;
(iv) Retain the Asymmetric Window at +200 and -500 basis points around the MPR.


Monday November 21 2016
Nigerian Economy Contracts for 3rd Quarter
National Bureau of Statistics | Joana Taborda | joana.taborda@tradingeconomics.com

The GDP in Nigeria shrank 2.24 percent year-on-year in the third quarter of 2016, following a 2.06 percent decline in the previous period and marking the third consecutive quarter of contraction. Figures compare with market expectations of a 2.58 percent decline. Lower oil prices continued to hurt the oil sector which slumped for the fourth straight quarter while the non-oil sector was flat after shrinking in the previous two periods.

The oil sector declined 22.01 percent year-on-year, following a 17.48 percent drop in the previous period. The country produced 1.63 million barrels per day, down from 2.17 mbpd a year earlier, hurt by lower oil prices and several attacks by militants on oil and gas facilities in the Niger Delta. As a result, the oil sector accounted for 8.19 percent of the GDP compared to 10.27 percent a year eaerlier. 

The non-oil sector was nearly flat (+0.03 percent): production continued to fall for manufacturing (-4.38 percent compared to -3.36 percent in the second quarter); electricity, gas, steam and air conditioning supply (-6.68 percent compared to -10.46 percent in the second quarter); construction (-6.13 percent compared to -6.28 percent) and trade (-1.38 percent compared to -0.03 percent), but rose for agriculture (+4.54 percent compared to 4.53 percent). 

On a quarterly basis, the economy expanded by 8.99 percent. 


Monday November 14 2016
Nigeria Inflation Rate Rises to 18.3% in October
National Bureau of Statistics | Joana Ferreira | joana.ferreira@tradingeconomics.com

Nigeria's consumer prices increased by 18.3 percent year-on-year in October 2016, following a 17.9 percent growth in the previous month and above market expectations of 18.2 percent. It was the highest inflation rate since October 2005, as prices for food continued to rise.

Compared to October 2015, cost of food increased by 17.1 percent (from +16.6 percent in September); and prices of imported food climbed 21.2 percent(from 19.2 percent). Additional upward pressure came from: Housing and utilities (+26.9 percent from +26.3 percent in September); clothing and footwear (+17.8 percent from +17.2 percent); transport (+18.2 percent from +18.1 percent); and furnishings and household equipment (+13 percent from +12.4 percent).

Annual core inflation rate went up to 18.1 percent, the highest since January 2007.

On a monthly basis, consumer prices increased 0.8 percent, the same as in September, as prices rose for: Food (+0.8 percent); imported food (+0.9 percent); housing and utilities (+0.7 percent); and clothing and footwear (+1 percent).