Analysts at the research department of Coronation Merchant Bank have said they expect Nigeria’s Gross Domestic Product (GDP)to grow by 2.5 per cent in the first quarter of this year compared with 3.52per cent in Q4’22. The analysts made the forecast while commenting on the 2022 full-year GDP report recently released by the National Bureau of Statistics (NBS). According to the analysts, the Central Bank of Nigeria’s (CBN) naira redesign policy, which has led to cash shortages, has dampened consumer spending, thus adversely impacting manufacturers and trade, a development, they predict “would reflect in the Q1’23 national accounts.”
The analysts said: “The current CBN de-monetisation policy, which has led to cash shortages, is adversely impacting manufacturers. We understand that manufacturers are experiencing lower output levels due to dampened consumer spending, this would reflect in the Q1’23 ational accounts.” They further stated: “A deeper dive into the manufacturing sector shows that the food and beverages and cement segments posted growth of 4.9 per cent y/y and 3.9 per centy/y, respectively in Q4. “Meanwhile, the textile, apparel, and footwear segment contracted by -1.2 per cent y/y. Telecommunications remained one of the fastest growing segments.
It posted growth of 11.2 per cent y/y and accounted for 13.5 per cent of total GDP in Q4. Data from the Nigerian Communications Commission (NCC) show that internet subscriptions increased by 9.1 per cent y/y in Q4’22. “Trade slowed to 4.5 per cent y/y compared with 5.1 per cent y/y recorded in Q3’22. The segment accounted for 15.8 per cent of total GDP in Q4’22. Domestic trade which relies heavily on cash transactions continues to face disruptions due to the recent cash crunch associated with the naira redesign policy. Cash remains the preferred means of payment given the very low tolerance for electronic transaction glitches.
“Based on the broad contributions to total GDP, agriculture, industry, and services accounted for 26 per cent, 17 per cent, and 57 per cent respectively, of total GDP in Q4 ’22. The services category remains a core growth driver. Looking ahead, we see GDP growth at 2.5 per cent y/y in Q1’23.” New Telegraph recently reported that Financial Derivatives Company Limited (FDC) expected the Nigerian economy to grow by 1.35 per cent in the first quarter of this year compared with 3.52per cent in Q4’22.
The firm, which stated this while also commenting on the 2022 full-year GDP report, stated: “We expect real GDP growth to sustain its positive trend in Q1’23, albeit lower than Q4’22, on the impact of currency scarcity, political uncertainty, and geopolitical tensions. “We are forecasting GDP growth of 1.35 per cent in Q1’23. In addition, the expected decline in growth with the sharp uptick in headline inflation to 21.8 per cent in January will be major considerations for the monetary policy committee at its next meeting in March.”