Daily insight: Domestic Output outlook – GDP growth forecast revised to 2.3%


The outlook for the Nigerian economy in H2-18 hangs on a balance between pre-election uncertainties and gradual recovery in the broader economy. While the trajectory of key macro variables is seemingly improving, uncertainties in the political space, both locally and externally, are disturbing.

Overall, we expect activities in the broader economy to continue to recover. The key drivers include an above $60.0/b oil price as well as stable local production which we anticipate to further boost oil GDP despite OPEC+’s agreement to maintain the prior 1.8mbpd cut on global supply and restore compliance to 100%. In the non-oil sector, Agric GDP will sustain uptrend on the back of stronger growth in crop production in Q2-18. However, Livestock output may remain strained as the herdsmen crisis persists. Momentum in the manufacturing sector is also expected to sustain the sharp recovery observed in Q1-18, even as political spending buoys activities in the Construction space. Nonetheless, growth in the Trade and Real Estate space may remain muted as observed in Q1-18.

On a balance of factors, we adjust our FY-18 GDP growth forecast to 2.3%. Output growth may, however, remain vulnerable to the vagaries of the oil market (both externally and internally) and uncertainties in the domestic socio-political and global environment.