Analysts foresee Nigeria’s economy in sluggish recovery in 2018 at 2.2%
December 14, 20171.4K views0 comments
Financial and economic analysts at Financial Derivative Company (FDC) have foreseen a sluggish economic recovery in 2018.
Bismarck Rewane, the chief executive officer of the FDC in a presentation at the Lagos Business School (LBS) Breakfast Session December 7, said economic recovery in 2018 will be slow, adding that overall gross domestic products (GDP) growth would average 2.2 percent in the new year.
He stated that pre-election spending and further depreciation in the value of naira would add to inflationary pressure, explaining that political instability and ongoing policy uncertainty will delay business-friendly reforms. He noted that banking system fragilities are expected to weigh on economic activities in the medium term.
Rewane, however, forecast that the banking sector would record healthy profit despite the low-interest environment and that there would be drastic fall in government securities trading and lower risk of default and non-performing loan (NPL) provision.
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He also noted that there would be improved margin as borrowing costs decline faster relative to lending rates decline. Also in the offing is the expected scramble by financial service providers to retain and expand the customer base.
For him, the stock exchange will be driven by reduced interest rate environment, capital raising, government intervention, entry of new players, increased international security and securitization of contractor debts.
On the aviation sector, Rewane said it would be driven by the concessioning of four airports: Lagos, Abuja, Kano, and Port- Harcourt. As a result, the domestic airline will be compelled to improve on performance to remain relevant, as there will be little to no forex backlog leading to increased frequency of foreign airlines.
On the other hand, load factor will increase to 95 percent in January 2018 on back-to-school traffic as election season will increase domestic passenger traffic flow.