FBNQuest Forecasts Economy Growing By 3.2% In 2023

FBNQUEST the unified brand identity for the Merchant Banking and Asset Management businesses of FBN Holdings Plc has predicted a 3.2 per cent economic growth for Nigeria this year, compared with 3.1 per cent in 2022.

This growth, post-election economic reforms, modest gains in the equities market and higher interest rates were among the key messages in the FBNQuest Research 2023 Outlook report published recently.

With the theme “2023 Economic and Industry Outlook”, the report captured the firm’s view on the Nigerian economy, the 2023 general elections, the socio-political environment, traditional asset classes (fixed income and equities) as well expectations for the current year.

With respect to non-oil sector growth, the report points out that non-oil GDP growth had averaged 4.7 per cent y/y over the past 8 quarters up to the fourth quarter of 2022, compared to 0.4 per cent in the previous 8 quarters. More recently, the services sectors, which accounted for around 56 percent of the economy in Q4 ‘22, expanded by 5.7 per cent in the fourth quarter of 2022.

Commenting on the outlook for 2023, Head Research, Macroeconomics and Fixed Income at FBNQuest, Tunde Abidoye, said that the transition of power and the commencement of the new administration’s term will set the tone for the second half of the year as the new government is expected to implement reforms that will stimulate growth and investment. “Nigeria’s new president faces several challenges including the fiscal pressures related to fuel subsidies, a huge budget deficit, difficulties with forex liquidity and low productivity in the oil sector. Nevertheless, we expect a new manager’s bounce for the economy that will support the moderate rise in equities while interest rates are expected to remain elevated.”

FBNQuest forecasts another positive year for equities in 2023, projecting gains of 15 percent amid a slow first half and relatively strong performance in the second half of the year. In the fixed income market, FBNQuest expects market yields to remain elevated through Q1 2023 and most of the rest of the year.