We expect FY-1 8 growth to settle at 1.7%y/y given the sluggish performance seen up to 9M-18. The pace of output growth is also unlikely to rise sharply in 2019, given election uncertainties which may constrain new investments and other economic activities in H1-19, especially if the initial outcome of the February election is inconclusive. Perceived poor implementation of 2019 budget and volatility in the oil market also stands as key risk points.
For now, output growth in the Agricultural sector is subdued by clashes between farmers and herders which undermines the successes of several policy incentives by the Federal Government and the CBN. Similarly, activities in the Manufacturing sector are likely to remain challenged by extreme operating environments amid gaping infrastructure, weaker volume growth, elevated operating expenses, distribution bottlenecks, high-interest rate environment, the severe impact of Apapa gridlock and inadequate power supply on manufacturing players. Contrariwise, we expect economic activities in the Services sector – driven majorly by trade – to improve due to the relative stability in the currency market. Finally, developments in the oil sector may remain unstable as geopolitical uncertainties and trade worries continue to distort global output momentum.
Overall, our position remains that in the absence of bold policy actions and surplus oil earnings, economic growth in Nigeria is unlikely to return to its pre-2015 high in 2019, especially as Nigeria has been included in OPEC’s output cut.
UNITED CAPITAL RESEARCH
