Confidence in Nigerian economy rises in June, to rise further in July

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By Editor

Businesses in Nigeria are now more confident in the Nigerian macro economy in June compared to the preceding month, even as confidence of the services and industrial sectors dipped, a Central Bank of Nigeria (CBN) survey has shown.

The overall confidence index (CI) of firms operating in the country on the macro economy rose to 34.7 index points in June 2018 compared with 28.9 index points recorded in May 2018, this represents over 20 percent growth in the confidence index.

According to the survey titled, “Business Expectations Survey (BES) for June, 2018”, businesses outlook for July is expected to report over 87 percent growth in confidence when compared to the level recorded in June.

“The businesses outlook for July 2018 shows a greater confidence on the macro economy at 64.9 index points,” the report stated.

Majority of the respondent firms expect the naira to appreciate further in July as the confidence index rose from 29.5 to 44.6 points.

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Also, respondent firms expect inflation rate to fall in July, with confidence index at -13.2 points, while borrowing rates are expected to rise this month as the confidence index outlook rose to 3.1 points

The CBN attributed the confidence in the country’s macro economy in June to respondents in the services, industrial, construction, and wholesale/retail trade sectors which stood at 20.5, 9.3, 2.6, 2.3 index points respectively.

The optimism of greater confidence in July was driven by respondents in the services, industrial, wholesale/retail trade, and construction sectors, projecting 37.8, 19.5, 3.9, 3.7 index points respectively.

“Furthermore, the positive outlook by type of business in June 2018 was driven by businesses that are neither import- nor export-oriented (22.6 points), import-oriented (6.0 points) both import- and export-oriented (5.8 points), and those that are export-related (0.5 points),” the report further stated.

Last week, FSDH Research, in their June Inflation Watch, projected that the inflation rate would drop to 10.94 percent Year-on-Year in June from 11.61 percent recorded in May, while the Financial Derivative Company (FDC) forecasted that the country’s headline inflation might likely to slip by 0.51 percent to 11.1 percent in June.

Also, FSDH had projected that the federal government will borrow up to N2 trillion to finance its budget in 2018, warning that the country cannot afford another level of naira devaluation as this will further worsen the public debt position.

By Oluwasegun Olakoyenikan….


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