Nairametrics Leading economic indicators (LEIs) point to a year on year (yoy) contraction in growth in January 2016, which may see Nigeria posting sub 1 percent or negative growth in Q1 (Jan – March), 2106 if the trend continues.
The LEIs signal a significant increase in the risk of recession, and are a pointer to the poor state of the Nigerian economy, and need for urgent policy response to accelerate growth.
|Indicator||January 2016||January 2015||% + or –|
|FAAC (N’ bn)||N370 bn||N500.1 bn||-26 %|
|Avg. Oil Price||$28 per barrel||$48 per barrel||-41%|
|NSE Index||23,916 points||29,562 points||-19 %|
|NSE market Cap||N8.14 trillion||N9.84 trillion||-17.2 %|
|FBN Manufacturing Index (PMI)||44.6||56.4||-20.9 %|
|Inflation (CPI)||9.62||8.2||+17.3 %|
|Private Sector Credit||N18.7 trillion||N18.1 trillion**||+3.3 %|
|M2 (Broad Money)||N20.02 trillion||N18.9 trillion**||+6.8 %|
* Indicates Parallel Market rates ** For Dec 2015 (latest figures)
Of the 9 (nine) indicators, only 2 are indicating expansion or positive while the rest (7) are negative.
FAAC allocations to 3 tiers of Govt are down by 26 percent (yoy), a signal of reduced spending capacity by the FG, and states.
Oil prices are down 41 percent and the naira is up by 51 percent in the parallel market which is negative for consumers.
The NSE Index has lost 19 percent, while the negative wealth effect from that has seen N1.7 trillion wiped off the market capitalisation of listed stocks.
The FBN Quest manufacturing Purchasing Managers Index (PMI) which tracks five variables of output, employment, new orders, delivery times from suppliers and stocks of purchases saw a contraction in January 2016, compared to January 2015.
The PMI declined in the headline to 44.6 with four sub-indices in negative territory. A reading below 50 represents contraction or negative growth.
Inflation increased to 9.6 percent in the period, while the only positives of Private Sector Credit and M2 (Broad money) saw anaemic growth of 3.3 percent and 6.8 percent respectively.