Proshare projects Nigerian economy to grow by 2.6%

Proshare, a financial consulting group, has projected that the Nigerian economy will grow by 2.6 per cent in 2022.

The company made this known in its 2022 Economic Outlook Report signed by its Managing Editor, Mr Teslim Shitta-Bey, on Monday in Lagos.

The company also anticipates that the Nigerian government will likely exceed the 3.5 per cent fiscal balance to Gross Domestic Product (GDP) ratio being a pre-election year.

It added that crude price would settle around 80 dollars per barrel as global oil consumption outpaced the combined slow growth in output from the Organisation of Petroleum Exporting Countries Plus (OPEC+) and non-OPEC producers and the United States tight output.

“Thus, this forecast is premised on the expectation that the situation with oil supply may remain the same.”

“At the same time, the transition to cleaner energy will continue to impact oil production.”

“As a result, economic diversification of exports, and government revenue will remain the single most important effort required to address Nigeria’s growth challenges,” it said.

For the manufacturing sector, Proshare posited that gains would be recorded from projected growth in population, and perhaps income inelasticity of processed food like wheat and bread.

It, however, stated that implicit devaluation and subsidy removal could raise input costs.

It added that the agricultural sector would likely expand by 2.1 per cent in 2022, driven by restructuring in household spending due to rising food prices and limited growth in income in 2022.

For trade, the company projected a growth rate of two to three per cent due to a slower than expected start, particularly with the slow pace of progress with the implementation of the Africa Continental Free Trade Area (AfCFTA).

“The menace of smuggling continued to undermine trade output while the cargo clearing logistics at the ports recently worsened by the collapse of the e-call up system also posed downside risks to the growth of the sector,” it said.

The company said the financial and insurance sector would likely continue to post a strong performance, with several high-profile mergers and acquisitions in the works.

Similarly, the Information and Communications Technology (ICT) sector would likely witness expansion on account of increase in the number of subscribers and the deployment of the 5G technology.

“These suggest the possibility that the trade sector may, for the first time in 2022, contribute less to the country’s GDP than the ICT sector.”

“Going forward, growth in the ICT sector is expected to come in between 9 per cent and 13 per cent in 2022.”

“Conversely, currency depreciation and global inflation would constrain growth in the real estate sector to between 2 per cent and 2.5 per cent,” it said.