Nearing the end of the electoral distraction
There will be relief in the markets on the conclusion of Nigeria’s current electoral cycle. Policymakers can return to work in the new administration (of whichever party). We expect the deregulation of petrol prices because of the opportunity presented by the collapse in the international oil price. Nigeria’s straitened fiscal and financial circumstances could provide the impetus for the FGN to push ahead with a number of stalled reforms.
Still respectable growth amid turmoil
In th,ese circumstances we have scaled down and not slashed our growth forecast, to 5.3% this year. Nigeria has a non-oil economy, albeit one overly dependent on oil for budget, receipts and fx inflows as result of policy failings over many years. Robust private consumption and investment remain the drivers of the non-oil economy. We do not hold out much hope for an oil sector revival.
Inflation an overlooked success story
The explicit target for headline inflation has now been met in both 2013 and 2014. This achievement has barely registered in financial markets, and is set to be repeated this year too.