Punch
A new report has said likely stronger dollar demand will convince the Central Bank of Nigeria of the need to tighten monetary conditions as with the trend across global central banks to manage foreign exchange reserve depletion.
Sigma Pensions said this in the report titled ‘Nigeria 2022 outlook: Consolidating on recovery but persisting large imbalances present headwinds’.
According to the report, the large fiscal borrowing requirements amid less liquid financial system conditions in 2022, relative to the last two years, suggest ample scope for heightened market expectations about higher interest rates.
It said, “We expect the oil sector to exit recession in 2022 as Nigeria’s crude production rebounds from the 1.6mbpd low base in 2021 towards a range of 1.8-1.85mbpd and as most OPEC+ curbs are removed by May 2022.
“Given our price and production expectations, we expect Nigeria’s external balance to improve as oil export receipts normalise to trend levels amid persisting import demand suppression on account of the CBN’s currency policy.
“We expect Nigeria’s economic growth to stabilise around 3.4 per cent in 2022, reflecting improvements across telecoms, trade, manufacturing, and oil.”
According to the report, a large fiscal borrowing plan and higher political risk premiums are expected ahead of the 2023 general elections.
