The 3.5 per cent economic growth projection for 2018 by the federal government in the Economic Recovery and Growth Plan (ERGP), was too optimistic, says Panafrican Capital Plc (PAC).
The investment company in its Nigeria economic outlook 2018 report, signed by Moses Ojo, Head, Investment Research & Business Development, noted that the current weakness in the economic structure makes the projection unattainable.
It, however, forecast that the country’s economy would grow between 2 per cent and 2.5 per cent in 2018, on the strength of sustained recovery in the oil sector, continuous growth in agriculture and the positive impact on investment and other private sector activities from improved availability of foreign exchange to support imports.
“Moreover, as government continues to implement the structural reforms in the ERGP, growth can be expected to strengthen in the medium term,” the report stressed.
It added that crude oil price would remain robust in the medium, projecting that oil price would average around US$59.00 per barrel this year, which would be 6.7 per cent above the average price of US$55.27 per barrel in 2017.
The PAC economic outlook also declared that the passage of the Petroleum Industry Governance Bill (PIGB) and other sub-component of the Bill would help attract investment into the sector in the medium to long term and to achieve the production target set by the Federal Government.
“Headline inflation is projected to remain high, declining slowly in the short-to-medium term; inflationary impact is expected to put pressure on general price index as the prices of imported goods remain sticky even after mild appreciation of Naira in the parallel market. Food inflation is expected to remain high in the short to medium term, due to slower growth in agricultural production, the restrictions on some imported food items and disruption in some regions in the country,” it maintained.
According to the report, foreign exchange liquidity is expected to improve during the year as the level of accretion to foreign reserves is growing on the back of recovery in the prices of crude oil and production and increasing inflow from foreign borrowings by the Federal Government.
“Therefore, the official and the parallel market exchange rate are expected to converge mildly in the Nigeria. Although, we projected slight improvement in the level of non-oil revenue generation at the federal level due to some initiatives currently embarked upon to expand the revenue source,” PAC claimed.
It projected that the country’s currency would strengthen to between N330 and N340/US$ in the parallel market while the official exchange rate remains at between N306 to N307/US$.