Recently, the CBN published its monthly business expectation survey report for the month of Sep-18. The survey showed that respondent firms expressed optimism on the macroeconomy as the overall Confidence Index rose to 24.8 points from 21.5 points in the previous month.
Also, respondent firms expect headline inflation rate to further ease, stronger naira and an increase in borrowing rates. On the other hand, sparse power supply, unfavourable economic and political climate, high-interest rate and unclear economic laws were highlighted as top pain points for businesses in Sep-18.
While the Business Expectation Survey (BES) gives a signal on the outlook for economic variables, just like other economic surveys, it should not be interpreted in isolation but be utilized in conjunction with other major data points and surveys.
Hence, a conjugation of the previously released PMI survey with the BES suggests a positive outlook for economic growth in Q3-18, albeit at a slower pace. It also underscores the need to expedite implementation of audacious reforms that can ameliorate infrastructure deficit and drive improvements in the operating environment. Notably, our view on inflation is a further uptick as pressures from the flooding in food-producing states and waning base effects are expected to weigh.
