257th CBN MPC Meeting: Nigeria’s Key Economic Indicators



The Monetary Policy Committee of the Central Bank of Nigeria will today from 2pm  take key decisions on the Monetary Policy Rate (MPR), Liquidity Ratio (LR), Cash Reserve Ratio (CRR), Asymmetrical corridor  and also assess the foreign exchange policy impact on the Nigerian market and economy.

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Already some of the economists, financial market research and financial analysts are of the strong view that the MPC will retain interest rates at 14%, signalling a dovish stand from the CBN.


This week is also a significant week in the global markets as the Oil Producing and Exporting Countries (OPEC) and Non-OPEC members meet to discuss critical issues around oil production cuts.


Libya and Nigeria will be crucial in the discourse as a deal is expected to be reached on the oil production output, this is vital for Nigeria in particular as crude oil remains its major revenue  and FX source.


The United States Federal Reserve will also meet in the week to take key decisions on the interest rate, which will be closely monitored by the global markets.


As the MPC meets, we take a look at the current economic indicators in Nigeria;


June 2017 PMI (52.9%)

According to the CBN, the Purchasing Managers Index for June, 2017 stood at 52.9% with a 0.4% increase from 52.5% in May, indicating expansion in the Manufacturing sector for the third consecutive month.


Twelve (12) sub-sectors reported growth in the month under review namely; computer & electronic products; paper products; plastics & rubber products; primary metal; transportation equipment; petroleum   &   coal   products; appliances & components; textile, apparel, leather & footwear; furniture & related products; electrical equipment; food, beverage & tobacco products and fabricated metal products.


Ten (10) sub-sectors also recorded growth in employment for the month under review, they include; computer & electronic products; plastics & rubber products; transportation equipment; appliances & components; paper products; petroleum & coal products; primary metal; fabricated  metal  products; textile, apparel, leather & footwear and food, beverage & tobacco  products.


There was also growth in the production level (58.2%), new orders (51.0%), supplier delivery time (50.3%), employment level(51.1%), raw materials inventory(52.3%), composite PMI for non-manufacturing sector (54.2%), business activity index (57.0%) and non-manufacturing inventory(51.8%).


June Inflation Rate (16.10%)

The National Bureau of Statistics reported that Nigeria’s Consumers Purchasing Index (CPI) eased from 16.25% in May to 16.10% in June, 2017. This meant a 0.15% percent points reduction, representing a fifth consecutive decline in the inflation rate, since January 2017. However, Core Sub-Index  and the Composite Food index rose by 12.50% and 19.91% respectively.


Q1 2017 GDP Economic Report (-0.52 Recession)

According to the National Bureau of Statistics, the first quarter of 2017 Gross Domestic Product Report showed a fifth consecutive quarter of contraction to -0.52%, which signified the country is still in a recession.


The Oil sector witnessed an average 1.83ml barrels per day (mbpd), 0.07 million barrels higher than the daily average production recorded in Q4 2016.


Growth in the Non-Oil sector was largely driven by the activities in the Agriculture sector (Crop production), Information & Communications, Manufacturing, Transportation and Other services. Overall, the non-oil sector grew by 0.72% in real terms during the reference quarter.


The non-oil sector growth was 1.05% higher than the rate recorded in the fourth quarter of 2016, and 0.90% higher than the corresponding quarter of 2016. In real terms, the Non-Oil sector contributed 91.10% to the nation’s GDP which is higher than the share recorded in the first quarter of 2016 (89.98%) but lower than the share recorded in the fourth quarter of 2016 (93.25%).


Q4 2016 Unemployment (14.2%)

The latest unemployment figure for Nigeria released by the National Bureau of statistics showed a rising trend in Q4 2016 to 14.2% from 13.9% for Q3 2016.


This marked a ninth consecutive rise in the unemployment rate of the country since Q4 2014. Unemployment rate in the urban areas was 18.4% compared to 12.3% in the rural areas, as there is preference for white-collar jobs, located mostly in urban centres.


Underemployment rate rose to 21.0% from 19.7% in Q3, 2016 and 18.7% in the corresponding quarter Q4, 2015.


Foreign Trade/Q1 2017 Capital Importation ($908.27ml)

From the Q1 2017 Capital Importation report of the NBS, total value of capital imported into Nigeria was estimated to be $908.27 million. Despite an increase by 27.5% relative to same quarter in 2016, it was the second lowest value since 2007.


The major contributor to the quarterly decline was a fall in Other investments, eventhough the Foreign Direct Investment contributed. Portfolio investment recorded an increase from previous quarter.


There were declines in capital imported into the Telecommunications and the Oil & Gas sectors, compared to previous quarters.


The second largest component of capital importation in the first quarter of 2017 was Portfolio Investment, which accounted for $313.61 million, or 34.53% of the total.


FDI was the smallest component of capital importation in the first quarter of 2017, as has generally been the case since 2013. This investment type accounted for $211.38 million, or 23.27% of the total.



With the challenges being faced on the economy in a recession, high inflation rate, high unemployment rate and a drop in capital importation the monetary policy authorities, like several economists and analysts have predicted will likely take a dovish stance by retaining the monetary policy rate, exercising caution in the midst of political-economic uncertainty.

Courtesy: Proshare.