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).




Friday October 14 2016
Nigeria Inflation Rate Hits Fresh 11-Year High
National Bureau of Statistics | Mojdeh Kazemi | mojdeh@tradingeconomics.com

Consumer prices in Nigeria went up by 17.9 percent year-on-year in September of 2016, following a 17.6 percent rise in the previous month and in line with market expectations. It was the highest reading since October 2005 boosted by cost of food, housing and utilities and transport.

Compared to September 2015, cost of food increased by 16.6 percent (16.4 percent in August); housing, water, electricity and gas surged by 26.3 percent (25.9 percent). Other contributors to the rise were: clothing and footwear (17.2 percent from 16.7 percent); transport (18 percent from 17.9 percent); furnishings and household equipment (12.4 percent, the same as in August); education (18.4 percent, the same as in August); health (10.9 percent, the same as in August); miscellaneous goods and services (12.7 percent from 12.5 percent); alcoholic beverages, tobacco and cola (14.9 percent from 14.8 percent) and restaurants and hotels (9.4 percent from 9.7 percent).

Annual core inflation rate went up to 17.7 percent from 17.2 percent in the previous month.

On a monthly basis, inflation slowed to 0.8 percent from 1 percent in August, as prices rose at a slower pace for food (0.8 percent from 1.6 percent); housing, water, electricity and gas (0.8 percent from 1.7 percent); transport (0.6 percent from 1.3 percent) and clothing and footwear (1 percent from 1.1 percent).


Tuesday September 20 2016
Nigeria Holds Key Rate Steady at 14%
Central Bank of Nigeria | Mojdeh Kazemi | mojdeh@tradingeconomics.com

The central bank of Nigeria left its benchmark interest rate unchanged at 14 percent at its September 2016 meeting, as expected. It follows a 200bps hike last meeting aiming to control the inflation and support the naira after the central bank abandoned the currency peg to the dollar in June. The inflation rate hit an eleven-year high of 17.6 percent in August and the economy shrank for the first time in more than twenty years in the second quarter of 2016 due to lower oil prices. The cash reserve ratio for commercial banks was also left on hold at 22.5 percent.

Excerpts from the Statement by the Central Bank of Nigeria:

The Committee acknowledged the weak macroeconomic performance and the challenges confronting the economy, but noted that the MPC had consistently called attention to the implications of the absence of robust fiscal policy to complement monetary policy in the past. The Committee also assessed the impact of its decision to tighten the stance of monetary policy by raising the MPR in July 2016. At the time, the Committee understood the complexity of the challenges facing the economy and the difficulty of arriving at an optimal policy mix to address rising inflation and economic contraction, simultaneously.

The Committee also recognized that monetary policy had been substantially burdened since 2009 and had been stretched. The Committee noted that new capital flows into the economy, approximately US$1 billion, had come in since July, while month-on-month inflation has declined continuously since May 2016. Against this ackground, members reemphasized the need to prioritize the use of monetary policy instruments in dealing essentially with stability issues around key prices (consumer prices and exchange rate) as prerequisites for growth.

The MPC considered the numerous analysis and calls for rates reduction but came to the conclusion that the greatest challenge to the economy today remains incomplete fiscal reforms which raise costs, risks and The MPC recognized the weak macroeconomic environment, as reflected particularly in increasing inflationary pressure and contraction in real output growth. In view of this, the MPC underscored the imperative of coordinated action, anchored by fiscal policy, to initiate recovery at the earliest time. Members called on the Federal Government to fast-track the implementation of the 2016 budget in order to stimulate economic activity to bridge the output gap and create employment. In the same vein, the MPC expressed concern over the non-payment of salaries in some states and urged express action in that direction to help stimulate aggregate demand. 

The data available to the Committee and forecasts of key variables suggest that the outlook for inflation in the medium term appears benign. First, month-on-month inflation has since May 2016 turned the curve; second, harvests have started to kick-in for most agricultural produce and should contribute to dampening consumer prices in the months ahead; and third, the current stance of monetary policy is expected to continue to help lock-in expectations of inflation which, has started to improve with the gradual return of stability in the foreign exchange market. In this light, the MPC believes that as inflows improve, the naira exchange rate should further stabilize. 

The Committee assessed the relevant risks, and concluded that the economy continues to face elevated risks on both price and output fronts. However, given its primary mandate and considering the limitations of its instruments with respect to output, the Committee elected to retain the current stance of policy.

In summary, all 10 MPC members voted to:
(i) Retain the MPR at 14.00 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


Friday September 16 2016
Nigeria Inflation Rate Highest Since 2005
National Bureau of Statistics | Mojdeh Kazemi | mojdeh@tradingeconomics.com

Consumer prices in Nigeria rose by 17.6 percent year-on-year in August of 2016, following a 17.1 percent gain in the previous month. It was the highest figure since October 2005 as cost of housing and utilities, food and transport rose at a faster pace.

Year-on-year, prices of food went up 16.4 percent (15.7 percent in the previous month), housing, water, electricity and gas rose 25.9 percent (25.6 percent). Additional pressure came from: clothing and footwear (16.7 percent from 16 percent); transport (17.9 percent from 17.5 percent); furnishings and household equipment (12.4 percent from 12.4 percent); education (18.4 percent from 17.7 percent); health (10.9 percent from 11 percent); miscellaneous goods and services (12.5 percent from 12.8 percent); alcoholic beverages, tobacco and cola (14.8 percent from 14.4 percent) and restaurants and hotels (9.7 percent from 9.9 percent).
Annual core inflation rate increased to 17.2 percent from 16.9 percent in the previous month.

On a monthly basis, consumer prices rose 1 percent compared to a 1.2 percent gain in the preceding month, as cost of food went up (1.6 percent); housing, water, electricity and gas (1.7 percent); transport (1.3 percent) and clothing and footwear (1.1 percent).


Wednesday August 31 2016
Nigeria Inflation Rate Hits Fresh 11-Year High in July
National Bureau of Statistics | Mojdeh Kazemi | mojdeh@tradingeconomics.com

Consumer prices in Nigeria jumped by 17.1 percent year-on-year in July of 2016, following a 16.5 percent increase in the previous month, compared to market expectation of 17.15 percent rise. It was the highest record since October 2005 as weak naira keeps pushing up food prices.

Compared to July 2015, prices of food surged 15.7 percent (15.3 percent in June), housing, water, electricity and gas jumped 25.6 percent (24.18 percent). Other upward pressure came from: clothing and footwear (16 percent from 15.5 percent); transport (17.5 percent from 16.8 percent); furnishings and household equipment (12.4 percent from 12.4 percent); education (17.7 percent from 16.4 percent); health (11 percent from 11 percent); miscellaneous goods and services (12.8 percent from 12.6 percent); alcoholic beverages, tobacco and cola (14.4 percent from 13.9 percent) and restaurants and hotels rose by 10.1 percent (9.9 percent).

Annual core inflation rate quickened to 16.9 percent from 16.2 percent in the previous month.

On a monthly basis, consumer prices increased 1.7 percent compared to a 2.75 percent rise in the preceding month, as cost of food  rose at a slower pace (+1.44 percent from +2.56 percent in May); housing, water, electricity and gas (+1.3 percent from +3.7 percent), transport (+2.15 percent from +2.7 percent) and clothing and footwear (+2.11 percent from +2.4 percent).


Wednesday August 31 2016
Nigerian Economy Shrinks 2.1% YoY in Q2
National Bureau of Statistics | Mojdeh Kazemi | mojdeh@tradingeconomics.com

The GDP in Nigeria shrank by 2.1 percent year-on-year in the second quarter of 2016, compared to a 0.36 percent drop in the previous period and worse than market consensus of a 1.5 percent decline. It is the first contraction in 20 years due to a decline in oil prices.

The oil sector recorded a 17.48 percent contraction (-15.59% in Q1) due to lower oil production and prices. Oil output was estimated at 1.69 million barrels per day (mbpd) during the second quarter, 0.42 mbpd lower than in the preceding period.

Industrial production shrank 9.53 percent (-5.49 percent in Q1): manufacturing declined 3.36 percent (-7 percent in Q1), mining and quarrying fell by 17.19 percent (-2.96 percent in Q1); electricity, gas, steam and water supply dropped 10.46 percent (-44.46 percent in Q1) and construction fell 6.28 percent (-5.37 percent in Q1).

The non-oil sector fell 0.38 percent, from a 0.18 percent decline in the previous period. Services dropped 1.25 percent, following a 0.8 percent increase in the previous period. Information and communication rose at a slower pace of 1.35 percent (+4.07 percent in Q1); internal trade went down by 0.03 percent (+2.02 percent in Q1); while real estate fell 5.27 percent (-4.69 percent in Q1) and finance and insurance decreased 10.82 percent (-11.28 percent in Q1).

Agriculture expanded 4.53 percent, higher than 3.09 percent  in Q1.

Quarter on quarter, the GDP expanded 0.82 percent, following a 13.7 percent fall in the previous period.



Tuesday July 26 2016
Nigeria Hikes Key Rate to 14% in July
Central Bank of Nigeria | Mojdeh Kazemi | mojdeh@tradingeconomics.com

The central bank of Nigeria raised its benchmark interest rate by 200 bps to 14 percent at its July 2016 meeting. It was the second rate hike so far this year, after the central bank abandoned the currency peg to the dollar in June. Since then, the naira plunged more than 55 percent to an all time low. In addition, the inflation rate kept its upward trend and reached 16.5 percent in June, the highest since 2005.

Excerpts from the Statement by the Central Bank of Nigeria:

The MPC recognized the weak macroeconomic environment, as reflected particularly in increasing inflationary pressure and contraction in real output growth. In view of this, the MPC underscored the imperative of coordinated action, anchored by fiscal policy, to initiate recovery at the earliest time. Members called on the Federal Government to fast-track the implementation of the 2016 budget in order to stimulate economic activity to bridge the output gap and create employment. In the same vein, the MPC expressed concern over the non-payment of salaries in some states and urged express action in that direction to help stimulate aggregate demand. 

The MPC noted the actions taken by the Bank as part of the implementation of the flexible foreign exchange regime  decided at its meeting in May which was designed to improve liquidity and stabilize the foreign exchange market. The Bank introduced a flexible exchange rate regime in the inter-bank market; introduced a Naira-settled OTC-FMDQ-OTC trading platform, adopted two-way quote trading platform at the inter-bank foreign exchange market and appointed foreign exchange primary dealers. However, the average naira exchange rate weakened at the inter-bank segment of the foreign exchange market during the review period following the liberalization of the market. The exchange rate at the interbank market opened at N197.00/US$ and closed at  292.90/US$, with a daily average of N244.95/US$ between May 25 and July 19, 2016. 

The MPC expressed strong support for the urgent diversification of the economy away from oil to manufacturing, agriculture and services; and called on all stakeholders to increase investment in growth stimulating and high employment elasticity sectors of the economy in order to lift the economy out of its current phase

The MPC in putting forward for tightening considered the high inflationary trend which has culminated into negative real interest rates in the economy; noting that this was discouraging to savings. Members also noted that the negative real interest rates did not support the recent flexible foreign exchange market as foreign investors attitude had remained lukewarm, showing unwillingness in bringing in new capital under the circumstance. Members further noted that there existed a substantial amount of international capital in negative yielding investments globally and Nigeria stood a chance of attracting such investments with sound macroeconomic policies. Consequently, members were of the view that an upward adjustment in interest rates would strongly signal not only the Bank’s commitment to price stability but also its desire reference band to gradually achieve positive real interest rates. 

In summary, the MPC voted to:

(i) Increase the MPR by 200 basis points from 12.00 to 14 per cent;
(ii) Retain the CRR at 22.50 per cent;
(iii) Retain the Liquidity Ratio at 30.00 per cent; and
(iv) Retain the Asymmetric Window at +200 and -500 basis points around the MPR



Saturday August 20 2016
Nigeria Inflation Rate Highest Since 2005 in June
National Bureau of Statistics | Mojdeh Kazemi | mojdeh@tradingeconomics.com

Consumer prices in Nigeria surged by 16.5 percent year-on-year in June of 2016, following a 15.6 percent jump in May. Figures came above market expectations of 16.3 percent increase, mostly driven by sharper rise in cost of food, housing and utilities.

Compared to June 2015, prices of food went up 15.3 percent (14.9 percent in May), housing, water, electricity and gas jumped 24.18 percent (22 percent). Other upward pressure came from: clothing and footwear (15.5 percent from 14 percent); transport (16.8 percent from 15.6 percent); furnishings and household equipment (12.4 percent from 11.3 percent); education (16.4 percent from 15.8 percent); health (11 percent from 10.1 percent); miscellaneous goods and services (12.6 percent from 12.7 percent) and alcoholic beverages, tobacco and cola (13.9 percent from 12.7 percent). Meanwhile, cost of restaurants and hotels rose by 9.9 percent at the same pace as in the previous month.

Annual core inflation rate accelerated to 16.2 percent from 15.1 percent in the previous month.

On a monthly basis, consumer prices increased 1.7 percent compared to a 2.75 percent rise in the preceding month, as cost of food  rose at a slower pace (+1.44 percent from +2.56 percent in May); housing, water, electricity and gas (+1.3 percent from +3.7 percent), transport (+2.15 percent from +2.7 percent) and clothing and footwear (+2.11 percent from +2.4 percent).