The Managing Director of Financial Derivatives Company Limited, a local research and investment firm, Mr. Bismarck Rewane, has said economic growth will increase in the second and third quarters of this year as Federal Government increases its budgetary spending.
He said following the passage of the 2017 Appropriation Bill by the National Assembly, the Federal Government might soon begin to release funds for capital projects.
Rewane said this in a note highlighting the company’s economic growth forecast for the second and third quarters. The note came on the heels of the release of first quarter growth figures by the National Bureau of Statistics.
He said, “The budget has been approved and is awaiting presidential sign off which is expected this month. Therefore, we anticipate that increased spending on the fiscal front will help increase output, both in the long and short run.
“However, for the economy to feel the full impact of investment, private sector investment has to be amplified. With the recent policy shift especially towards improving the ease of doing business in the country, we expect a slow but consistent recovery in investor confidence. Even though the economic recovery may have begun, it is only likely to become manifest in Q2 and Q3.”
According to the expert, the pace of growth in the first quarter remains sluggish, in spite of the improvement recorded in some business proxies used to describe output performance.
The first quarter of this year, he said, was the period the CBN commenced its agenda to boost liquidity in the forex market and ensure exchange rate stability, with sales of approximately $4bn.
The naira, according to him, has appreciated by 25 per cent on the parallel market with a near convergence in market rates.
Rewane said, “A total of N1.4tn was shared in the first quarter of this year by all arms of government. However, the impact of this stimulus was not as robust as anticipated. This opens the door to private investment.
“However, a credibility gap still hovers in the market despite interventions by the CBN. It will take a long time for confidence to be restored. Therefore as mentioned, synergy and clarity among policies and policymakers are imperative.”