FCSL MONTHLY ECONOMIC MARKET REPORT-JANUARY 2019
MPR Retained for the Fifteen Consecutive Time
The Monetary Policy Committee held its first meeting for 2019 fiscal year, wherein it acknowledged the resurgence of moderate inflationary pressure and possible threats to the appreciation in the country’s external reserve due to declining crude oil prices, the committee also highlighted the growing concerns surrounding slowdown in the global economic activity that has been an off root from the going trade tensions. MPC considered the potential risk confronting the economy, inclusive were global and domestic Inflationary pressures that have intensified the risk of currency depreciation, as such the committee resolve not to vote for rate easing option, while a rate tightening option was discarded, in order not to have a relapse on some earlier gains achieved.
In view of the above, the committee had 11 of its members voting to retaining the MPC parameters at its current level, which are as follows:
- Retain the MPR at 14 per cent;
- Retain the asymmetric corridor of +200/-500 basis points around the MPR;
- Retain the CRR at 22.5 per cent; and IV. Retain the Liquidity Ratio at 30 per cent.
Crude Oil Price Clouded In Uncertainty
Given early forecast of Crude oil prices for the year that hinges on the health of the global economy, during the month crude prices closely tracked equity and bond markets. Also recent happenings around the globe is expected to have immediate impact on the price volatility of the commodity, this happenings include;
- S. shale production growth,
- the policy of OPEC and its allies,
- sanctions on Iran and the threat of sanctions on Venezuela.
The probability of the above happenings and it influencing the direction of crude prices, has already being identified in lost of momentum of economic expansion, this is dated back to mid of last year, the magnitude of the slowdown hinges on whether global growth starts to accelerate again, settles into an extended soft patch, or falls into an outright recession, these phases of global growth could be translated into several hundred thousand barrels per day (bpd) of consumption growth that will eventually influence oil prices. During the course of the month, January 2019, West Texas Intermediate, traded high for the month, at $54.23 and a traded low at $46.54, while Brent, traded high at $61.89 and a traded low at $54.91 for the same month, which simply translate into an appreciation of 12.71% for WTI and 15.58% for Brent in the month of January, 2019. Crude Oil Price remained threatened by growth in US. Crude supply that may undermine any boost from OPEC production cuts and sanctions on Iran and Venezuela, the month of January represent the third consecutive time that crude price has been downgraded. Read More
Nigeria Q4 GDP grew to 2.38%
The recently released Nigeria’s Gross Domestic Product report for the fourth quarter of 2018 as reported by National Bureau of Statistics, which stated that the country’s GDP grew by 2.38%in real terms –year on year basis. The reported GDP of 2.38% for Q4 of 2018, increased by 0.27% compared to the Q4 of 2017 that stood at 2.11%. Given Q4 growth, it implies that real GDP grew at an annual growth rate of 1.93% for year 2018 as compared to 2017 real GDP annual growth rate that stood at 0.82%. The Nation’s Nominal GDP for 2018 stood at N127m as compared to N113m Nominal GDP figure for year 2017, this represent a 12.65% growth. Read More