Economy experts have called for cautious enthusiasm for the Nigerian economy as the election year 2019 approaches.
In the latest Lagos Business School LBS, 2019 Year Ahead edition, the institution looks at the global imperatives, turbulence in world trade, the revisionism to protectionist policies, the dangers of competitive devaluation and the spectre of another global recession.
In Africa, they look at the challenges of regional integration and vulnerability of African commodity producers to slower growth, price volatility and higher debt.
According to them, the Nigerian economy may succumb to pressures of an oil price (down by 40%) to $53pb range and a cut in production to 1.67mbpd. The lower oil revenue and a growing deficit will erode the fiscal consolidation policies of the government.
With its banking industry fragility and a naira under speculative pressure, 2019 will be a year of technological and investment opportunities but serious political and policy challenges.
They stated that the amicable settlement between Nigeria and MTN after an avoidable saga was a good way to end an eruptive year.
Nigeria’s 2019 election is being greeted with the classical reaction of an economic indifference curve. This curve is a combination of choices between commodity A and B which gives a consumer the same level of satisfaction or dissatisfaction.
Most economics textbooks talk about a choice between commodity A and B, which by strange coincidence is the first letter of the names of the two leading candidates. Talking to a cross section of young people between the ages of 20 and 30, most respondents were unenthusiastic, indifferent and apathetic. Some considered it an Hobson’s choice. Based on this, we are anticipating vorter apathy and a low turnout in the February election.
In the attached slides presented by Bismarck Rewane at the LBS December dinner, he takes a deep dive into the imponderables, flashpoints and unknowns of 2019 and tries to unravel the uncertainties ahead.
Recently, at its Executive Breakfast in November, LBS called for caution over the approaching year. It benchmarked its projections on two major premises, including:
As we approach the 2019 elections, investors are being cautious about the likely changes and implications of economic policy before and after the elections. The Government has approved a conservative and prudent budget for 2019 of N8.73trn whilst emphasizing policy continuity.
Reserves down & Inflation up
However with a 5.08% decline in External Reserves, a 0.05% rise in inflation and a fall in consumer confidence, investors are now more nervous than optimistic about 2019. For now all eyes are on the release of the long delayed unemployment data. The cheery news is that oil production is back up to 1.8mbp and with condensates it reaches 2.1mbp. This will help replenish the fast eroding external reserves and provides support for the Naira which has fallen to N363/$ in the parallel market.