Economic Reports ( GDP Report and Inflation Report)

Headline Inflation Increased by 13.22% in August 2020; 0.40% higher than July 2020 (12.82%) Rate

Dear Client/Reader,

The National Bureau of Statistics just reported that the consumer price index, (CPI) which measures inflation increased by 13.22% (year-on-year) in August 2020. This is 40 basis points higher than the rate recorded in July 2020 (12.82%).

The percentage change in the average composite CPI for the twelve months period ending August 2020 over the average of the CPI for the previous twelve months period was 12.23%, indicating a 0.18% increase from 12.05% recorded in July 2020.

Food Index Rose by 16.00%

Food index rose by 16.00% in August 2020. The average annual rate of change of the Food sub-index for the twelve-month period ending August 2020 over the previous twelve-month average was 14.87%, 0.24% higher than the average annual rate of change recorded in July 2020 (14.63%). This rise in the food index was caused by increases in prices of Bread and cereals, Potatoes, Yam and other tubers, Meat, Fish, Fruits, Oils and fats and Vegetables. On a  month-on-month basis, the food sub-index increased by 1.67% in August 2020, up by 0.15% from 1.52% recorded in July 2020.

Core Index stood at 10.52%

Price movements recorded by the Core index stood at 10.52% (year -on-year) in August 2020, up by 42 basis points as against 10.10% recorded in July 2020. The highest increases were recorded in prices of Passenger transport by air, Hospital services, Medical services, Pharmaceutical products, Maintenance and repair of personal transport equipment, Vehicle spare parts, Motor cars, Passenger transport by road, Miscellaneous services relating to the dwelling, Repair of furniture and Paramedical services. On a month-on-month basis, the core sub-index increased by 1.05% in August 2020, up by 30 basis points from 0.75% recorded in July 2020.

Urban Index increased by 13.83%

The Urban index increased by 13.83% (year-on-year) in August 2020 compared to 13.40% recorded in July 2020, while the Rural index increased by 12.65% (year -on-year) in August 2020 as against 12.28% in July 2020. On a month-on-month basis, the urban index rose by 1.42% in August 2020, up by 0.15% from 1.27% recorded in July 2020, while the rural index also rose by 1.27% in August 2020, up by 0.04% from the rate recorded in July 2020 (1.23%).

Regards,

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Nigeria Records GDP Growth of -6.10% in Q2’2020 lower than 2.12% in Q2’2019

Dear Client/Reader,

The National Bureau of Statistics just released the second quarter 2020 GDP report. According to the report, the nation’s Gross Domestic Product (GDP) contracted by 6.10% (year-on-year) in real terms.

This growth in Q2’2020 is 8.22% points lower than the rate recorded in the corresponding quarter of 2019 (2.12%) and 7.97% points lower than the rate recorded in Q1’2020 (1.87%).

In the quarter under review, aggregate GDP stood at N34.02 trillion in nominal terms. This represents 2.80% year on year decline in nominal GDP when compared to the corresponding quarter of 2019 (N35.00 trillion). The nominal GDP growth rate in Q2’2020 was lower than the rate recorded in Q2’2019 by 16.81%.

The Oil Sector

During the period under review, Oil production stood at 1.81 million barrels per day (mbpd), 0.21 million barrels lower than the daily average production recorded in the second quarter of 2019 (2.02 mbpd).

Real growth of the oil sector was -6.63% (year-on-year) in Q2’2020. This is lower by 13.80% points compared to the rate recorded in the same quarter, 2019. Oil sector growth decreased by -11.69% points when compared to the second quarter of 2019 (5.06%). Quarter-on-Quarter, the oil sector recorded a growth rate of -10.82% in Q2’2020. As a share of the economy, the Oil sector contributed 8.93% to total real GDP in Q2’2020, up from figures recorded in the corresponding period of 2019 and the preceding quarter, where it contributed 8.98% and 9.50%, respectively.

The Non-Oil sector

The non-oil sector declined by -6.05% in real terms during the reference quarter. This is lower by -7.70% point compared to the rate recorded in the same quarter of 2019 and -7.60% points lower than the first quarter of 2020. The non-oil sector output was mainly driven by Financial and Insurance (Financial Institutions), Information and Communication (Telecommunications), Agriculture (Crop Production), and Public Administration. On the other hand, sectors which experienced the highest negative growth included Transport and Storage, Accommodation and Food Services, Construction, Education, Real estate and Trade among others

In real terms, the Non-Oil sector contributed 91.07% to the nation’s GDP during the reference quarter, higher than the 91.02% recorded in Q2’2019 and the 90.50% recorded in the first quarter of 2020.

Regards.

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Headline Inflation Increased by 12.82% in July 2020; 0.26% higher than June 2020 (12.56%) Rate

Dear Client/Reader,

The National Bureau of Statistics just reported that the consumer price index, (CPI) which measures inflation increased by 12.82% (year-on-year) in July 2020. This is 26 basis points higher than the rate recorded in June 2020 (12.56%).

The percentage change in the average composite CPI for the twelve months period ending July 2020 over the average of the CPI for the previous twelve months period was 12.05%, indicating 0.15 points increase from 11.90% recorded in June 2020.

Food Index Rose by 15.48%

Food index rose by 15.48% in July 2020. The average annual rate of change of the Food sub-index for the twelve-month period ending July 2020 over the previous twelve-month average was 14.63%, 0.17% points higher than the average annual rate of change recorded in June 2020 (14.46%). This rise in the food index was caused by increases in prices of Bread and cereals, Potatoes, yam and other tubers, Meat, Fruits, Oils and fats, and Fish. On a month-on-month basis, the food sub-index increased by 1.52% in July 2020, up by 0.04% points from 1.48% recorded in June 2020.

Core Index stood at 10.10%

Price movements recorded by the Core index stood at 10.10% (year -on-year) in July 2020, down by 3 basis points as against 10.13% recorded in June 2020. The highest increases were recorded in prices of Medical services, Passenger transport by air, Pharmaceutical products, Hospital services, Passenger transport by road, Maintenance and repair of personal transport equipment, Paramedical services and Vehicle spare parts. On a month-on-month basis, the core sub-index increased by 0.75% in July 2020, down by 0.11% points from 0.86% recorded in June 2020.

Urban Index increased by 13.40%

The Urban index increased by 13.40% (year-on-year) in July 2020 compared to 13.18% recorded in June 2020, while the Rural index increased by 12.28% (year -on-year) in July 2020 as against 11.99% in June 2020. On a month-on-month basis, the urban index rose by 1.27% in July 2020, up by 0.04% from 1.23% recorded in June 2020, while the rural index also rose by 1.23% in July 2020, up by 0.04% from the rate recorded in June 2020 (1.19%).

Regards,

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Nigeria Economic Sustainability Plan MBC Securities

The Economic Sustainability Committee set up in March investigated the economic impacts of the Covid-19 pandemic and sought to develop a clear economic sustainability plan in response to the economic crisis. The report from the committee however revealed the grim economic reality that the economy is presented with, underscored by huge revenue pitfalls and heightened unemployment projections. Nevertheless, the report recommended policy measures that could be implemented to avert a deep recession.

Economic Challenges Posed by the Covid-19 Pandemic
According to the report, the Covid-19 pandemic has severely disturbed the domestic economy, disrupting supply chains and causing massive job losses. One distressing outcome of the pandemic is the crash of crude oil prices, given that crude oil accounts for 50% of consolidated government revenues, 30% of banking sector credit and 90% of export earnings. Therefore, such a decline in oil price coupled with the inability to sell our rising crude inventory has resulted into large budgetary gaps, and also brought about the depletion of our dollar earnings, hence, forcing a depreciation of the Naira, resulting into an uptick in prices – mostly of imported goods.

Please find attached our full report

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Inflation Increased by 12.56% in June 2020; 0.16% higher than May 2020 (12.40%) Rate

Dear Client/Reader,

The National Bureau of Statistics just reported that the consumer price index, (CPI) which measures inflation increased by 12.56% (year-on-year) in June 2020. This is 16 basis points higher than the rate recorded in May 2020 (12.40%).

The percentage change in the average composite CPI for the twelve months period ending June 2020 over the average of the CPI for the previous twelve months period was 11.90%, indicating 0.11 points increase from 11.79% recorded in May 2020.

Please find attached our full report

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Nigeria Records GDP Growth of 1.87% in Q1’2020 lower than 2.10% in Q1’2019

Dear Client/Reader,

The National Bureau of Statistics just released the first quarter 2020 GDP report.

According to the report, the nation’s Gross Domestic Product (GDP) grew by 1.87% (year-on-year) in real terms.

This growth in Q1’2020 is 0.23% points lower than the rate recorded in the corresponding quarter of 2019 (2.10%) and 68 basis points lower than the rate recorded in Q4’2019 (2.55%). In the quarter under review, aggregate GDP stood at N35.65 trillion in nominal terms. This represents 12.01% year on year increase in nominal GDP when compared to the corresponding quarter of 2019 (N31.82 trillion). The nominal GDP growth rate in Q1’2020 was higher than the rate recorded in Q1’2019 by 0.11%.

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2020 Economic Model and Sectoral Opportunities

Dear Client/Reader,
The Nigerian Economy is faced with the twin problem of low oil prices and the Covid-19 pandemic. Consequently, growth forecast for 2020 will be built around the expected impact of the crash in oil prices on the performance on the economy and on different sectors – as observed in the 2016 oil induced recession, and also factor in the impact of the virus and its containment measures on economic activities. In addition, our economic expectations would account for the unprecedented policy response proposed by the government to tackle this economic crisis by way of a N2.3 billion stimulus plan.
Despite the ravaging pandemic, there are still viable investment opportunities in the equity market. Equities that exist in the identified opportunity sectors are best poised to weather the headwind and sustain their growth and profitability. Consequently, we have identified, and recommended stocks that are strategically positioned to offer attractive returns even during a pandemic.
Please find attached our full report titled “2020 Economic Model and Sectoral Opportunities”.

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