Global Economy Roars as Restrictions Ease Up

Global Economy
Photo by Stefan Fluck

The global economy expanded strongly in April 2021 – the tenth consecutive expansion – as growth in output and new business orders was sustained. Notably, new business and new export orders indexes expanded to 56.3 points and 52.4 points respectively (from 54.4 points and 50.2 points in March).

Input cost index also rose to 64.9 points (from 64.1 points) and was transferred to consumers as the output price index rose to 56.9 from 55.9. Expansion in business activity was partly spurred by increased business confidence amid the increased rollout of Coronavirus vaccines which allowed for an easing of lockdowns in several countries.

In the global energy market, the latest statistics from the U.S. EIA showed that world crude oil consumption upped m-o-m by 0.04% to 96 million barrels per day (mbpd) while world crude oil supply increased by 1.64% to 93.5 mbpd in March.

Meanwhile, world rig count fell by 3.07% to 1,231 in March. In the month of April, however, global crude oil prices generally moderated – Brent crude oil spot price mellowed m-o-m, on average, by 0.92% to USD64.81 a barrel – partly perturbed by rising new cases of coronavirus in India that upset confidence in the global crude oil markets.

Nigeria’s business activity remained in expansion territory as the IHS Markit-Stanbic IBTC headline PMI remained at 52.9 points in April. Expansion in new orders and output was suggestive of higher demand requiring higher staffing and inventory purchases. Backlogs also reduced.

Meanwhile, despite the aggressive rise in inflation rate, net savers earned little as the average savings deposit rate remained less than 2% while 3- and 12-month deposit rates fell to 3.03% and 4.94% (from 3.13% and 5.36% in February) respectively.

The local bourse rebounded in April amid a number of positive first-quarter financial performance announcements by corporates as well as cum-div purchases based on 2020 corporate actions. This was also against the backdrop of the rising yield environment (stop rates of auctioned government securities trended higher) which continued to allure “risk-off” investors.