Businesses in Nigeria are once again optimistic about the direction of the economy according to the CBN’s Business Expectation Survey for the month of June 2018.
According to the report, Respondent firms expressed more optimism on the macroeconomy in June 2018 when compared with the level recorded in the preceding month.
- Respondents’ outlook on the volume of total order, business activity and financial
conditions (working capital) remained positive during the review period.
- Firms identified insufficient power supply, high-interest rate, unfavourable economic
climate, financial problems, unclear economic laws, insufficient demand and
unfavourable political climate as the major factors constraining business activity in
the current month.
- Respondent firms expect the Naira to appreciate in the current and next months;
inflation rate to fall in both months, and borrowing rates to rise in both months.
- Businesses surveyed in the report also showed greater confidence in the economy for the month of July 2018.
- Also interesting to note that the positive outlook by type of business in June 2018 was
driven by businesses that are neither import- nor export-oriented.
There seemed to be more optimism from businesses in the from services, industrial,
wholesale/retail trade and construction sectors. This perhaps reflects favourable government policies that have encouraged local competing with foreign imports.
The report also highlights a positive outlook for job creation in the month of July compared to the previous month. Higher prospects for creating jobs was recorded in the Service sector, industrial, wholesale-retail trade and construction sectors.
The report concludes that an analysis of businesses with expansion plans by sector in the next month showed that the services sector indicated greater disposition for expansion followed by construction and wholesale/retail sectors.
The National Bureau of Statistics is yet to release Nigeria’s jobs report for any period this year ad analysts expect a higher unemployment rate. Nigeria’s pulled out of a crushing recession in the second quarter of 2017. The economy has since returned to paltry growth with inflation rate also trending lower.
Other CBN survey’s such as the Purchasers Manager’s Index has also shown remarkable improvement over the last few months as businesses reported a generally better outlook for the economy.
Despite these positives, harsh economic conditions still persist as reported in the survey. Challenges with ease of doing business, high-interest rates, logistics remain a major challenge for businesses in the country.