Financial Derivatives Company Limited (FDC) has said the Nigerian economy is likely to grow by 1.35 per cent in the first quarter of this year compared with 3.52per cent in Q4’22.
The firm made the forecast while reacting to the 2022 full-year Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS) last week.
Noting that the 3.1 per cent economic growth recorded by the country in 2022, is in line with its 3.01 per cent forecast and the International Monetary Fund’s (IMF) 3.2 per cent prediction, the FDC said: “The positive growth rate can be attributed to the festive period and increased economic activities in Q4,” adding that “typically, Q4 growth rates are higher than in preceding quarters.”
Although it noted that on a quarterly basis, the real GDP grew by 3.52 per cent in Q4’22, down by 0.46 per cent from 3.98 per cent in Q4’21, the firm averred that “ultimately, Nigeria’s GDP figures for 2022 show that the economy could be on a mend, despite the headwinds it faced in the year.”
“Nigeria wriggled through spiralling inflation (2022’s average: 18.75%), currency crises (N740/$ at the parallel market), escalating insecurity, restrictive monetary policy, dwindling fiscal revenue, and policy inconsistency.
All these happened together with external imbalances stemming from the lingering Russian-Ukraine war. “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,” the FDC stated.