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By Omodele Adigun
The 3.11 per cent growth in the GDP during the first quarter of the year illustrates progress made by the country in reclaiming stability post-COVID-19.
According to an expert, Mr Lukman Otunuga, a Senior Research Analyst with FXTM, with the improvement in the non-oil sector driving the growth, this may brighten the growth outlook.
Commenting on the GDP growth, Otunuga said: “There two are two ways one could interpret Nigeria’s latest GDP figure of 3.11 per cent in Q1 of 2022. The optimists will say the country’s economy grew for the sixth consecutive quarter in Q1 while pessimists may highlight how economic growth slowed for the third consecutive quarter.
“Either way, Nigeria’s economy continues to display resilience against external and domestic risks. With the improvement in the non-oil sector driving growth, this may brighten the growth outlook. But could this be signs of Nigeria breaking away from the chains of oil reliance to derive growth from sustainable sources? It may be too early to come to any meaningful conclusion. However, the report is encouraging and illustrates progress made by the country in reclaiming stability post-Covid-19.
“Given how Africa’s largest economy has been able to maintain growth in the past six quarters on the back of loose monetary policies by the CBN, a rate hike could disrupt Nigeria’s economic recovery.
As the global war against inflation rages on, central banks are stepping up.
However, the CBN is likely to remain on the sidelines for now. Nevertheless, inflation is still a cause for concern with consumer prices accelerating for the third straight month to 16.82 per cent in April 2022. With the general elections around the corner, pre-election spending could translate to rising price pressures. On top of this, the widening policy divergence between the Federal Reserve and the CBN could punish the Naira. It’s worth keeping in mind that the dollar remains heavily supported by aggressive Fed rate hike bets and is likely to remain strong for the rest of 2022. A powerful dollar is bad news for emerging market currencies including the Naira which continues to depreciate in both the official and unofficial markets.
