First Securities Discount Houses has said that the Nigerian economy, which was severely hit in 2016 by the drop in the crude oil price and crude oil production, is beginning to show some signs of positive recovery.
FSDH Group is a financial services supermarket that delivers expert financial services in the Nigerian Financial markets to its select clientele.
The FSDH group said that the economy, which officially entered into a recession in the second quarter of 2016, following the release of the Gross Domestic Product figures showing two consecutive quarters of GDP contraction, is showing strong signs of recovery.
According to a report released by FSDH, the recovery seems to be coming on the back of the recent increase in crude oil price, the increase in crude oil production in Nigeria and the Central Bank of Nigeria’s continued supply of foreign exchange to both retail and corporate users.
However, the Purchasing Managers’ Index report of the CBN shows that both the Composite PMI and the Production level in the manufacturing sector improved in March.
Although the Composite PMI in March 2017 at 47.7 points was below the 50 point level (which suggests a decline in activities), it was an improvement from the month of February 2017 figure of 44.6 points.
Analysis of the report further stated that the Index for the production level in the manufacturing sector at 50.8 points is, however, higher than the 50 point level (which suggests an improvement).
The monthly rates of increase in both the Composite PMI and the Production level were the second highest in two years and the highest since January 2017. Analysts’ consensus is that the inflation rate will continue to trend downward in 2017. This means that the purchasing power of Nigerians should improve and stimulate demand for both consumer and industrial goods.
Inflation rate will continue to trend downward in 2017
In March, the equity market recorded its first Month-on-Month appreciation of year 2017, after depreciating for two consecutive months. The Nigerian Stock Exchange All Share Index (NSE ASI) appreciated marginally by 0.74 per cent in March 2017 to close at 25,516.34 points.
The NSE ASI depreciated 3.12 per cent and 2.72 per cent in January 2017 and February 2017, respectively. All the NSE Sectoral Indices appreciated in the month of March 2017, except the NSE Banking Index.
Although the Year-toDate performance of the NSE ASI remained in negative territory at the end of the month of March 2017, the monthly performance is an indicator of investors’ improving outlook on the economy
