Analysts at Financial Derivatives Company (FDC) have reiterated that policy changes introduced by the Federal Government must be accompanied by institutional reforms to have a positive impact on the country’s economy.

The analysts stated this while commenting on the latest Gross Domestic Product (GDP) report released by the National Bureau of Statistics (NBS) which showed that Nigeria’s real GDP growth increased to 3.46 per cent in Q3’24 from 2.54 per cent in Q3’23.

The analysts said that although the economy remained resilient despite surging inflation and high borrowing costs, occasioned by a cumulative interest rate hike of 8.75 per cent, “overall financial conditions remain relatively loose.”

Specifically, they noted that the NBS growth data indicates that the expanding and rapidly growing sectors-financial sector (30.83%), metal ore (21.83%), and rail transport and pipeline (19.68%)-are job inelastic, which means that “growth may not be inclusive and will not result in lower levels of unemployment.”

Stressing that “policy changes without institutional reform could be counterproductive,” the analysts said: “Although the growth trend is positive, the macroeconomic environment remains strained with increasing price of PMS and a weak naira in the forex market.

The average purchasing power index (PPI) declined to 49.97 reflecting a contraction in economic activity. “Policy changes in the last 12 months have faced significant headwinds.

This is mainly because the institutions meant to deliver value to the people remain weak and ineffective. Therefore, policy change must be followed by institutional reforms.”

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