FBNQuest report puts Nigeria’s Q3 growth at -1.7%

As Nigerians await the report of the Gross Domestic Product (GDP) for the third quarter (Q3) of the year, FBNQuest’s economic outlook has forecast a successive negative growth for the country.

But on the sidelines of the unveiling of the report titled: “A Quarter of Drifting Ahead” by FBNQuest, at its yearly investor conference in Lagos, the Minister of Industry, Trade and Investment, Okechukwu Enelamah, harped on the need to develop the power sector.  This, he said will industrialise economic activities.

Mr. Gregory Krinsten of FBNQuest, in his presentation on Nigeria’s economic outlook, said the growth pressure on the country is still high as there is a projected -1.7 per cent year-on-year contraction in third quarter, making it the third consecutive decline in the year.

He said that the authorities seem to have no choice but to reach a deal with the Niger Delta militants and ensure that its fiscal operations provide some boosts to the economy.

However, he noted that there has been a trend of increase in the federal allocations for the past three months, but mostly driven by the devaluation of the currency and stronger non-oil revenue collections, which would expectedly rub off on government’s capital releases.

He also noted that it has become a struggle to see foreign exchange inflows to complement the Central Bank of Nigeria (CBN’s) small daily offering, adding that the various suggestions to solve the problem are either not large enough to make impact or politically unacceptable.

Enelamah, noting that Nigerians are enterprising and must be supported to accelerate the growth of the economy, pointed out that they thrive as individuals outside the country, but not as a group for the nation. He said this borders on developing specific policies for small businesses.

According to him, with the foreign exchange crisis caused by volatile oil prices, the country’s investments need not be built around foreign investors, who are not always there for the economy, even when returns are always guaranteed by right policy.

Also, Mr. Olubunmi Asaolu, while presenting a report titled: “Nigerian Banks, Weathering the Storm”, stated that weaker growth and earnings’ trend among corporates, particularly banks, were driven by macroeconomic challenges.

He said the over-reliance on petrodollars has now created negative outcomes for the economy, especially with the uncertainty in the price of the commodity, affecting banks as well.

Consequently, the impact of the ongoing challenges has crystalised in another gloomy projection for the economy, as the company projects -1.2 per cent record for the GDP in 2016, against 2.8 per cent growth in 2015.

“Nigerian banks are experiencing their slowest year since the 2009 crisis. First half of 2016 headline growth rates are flattering because of the impact of Naira devaluation.

“Despite the macro headwinds, some key positives stand out. Banks have been more resilient than the market has been willing to give them credit for. The non-performing loan ratios of some banks are still below five per cent,” he said.

Asaolu noted that banks have capitalised on Naira devaluation to make substantial foreign exchange-related gains, which are likely to support their third quarter 2016 earnings profile.