….As PMI Dips To 49.1% In October
Economists at CAPE Economic Research and Consulting firm have predicted that in the medium-term Nigeria’s economic output growth (Gross Domestic Product) growth rate would moderate to 1.73 percent in the 5rd quarter and dipped further by 0.02 percentage points to 1.54 percent in Q4 this year.
The experts, in the just published ‘Economic Newsletter: Volume 2 Issue 10 November 2023’ report circulated to BRTNews.ng, hinged their forecast on the current headwinds to output growth high energy prices, exchange rate volatility arising from foreign exchange supply shortage, insecurity, infrastructure deficit, structural bottlenecks, and elevated cost of production, all of which continued to weigh on output growth.
They further clarified: “As highlighted in our previous edition, we reiterate that output growth in the third quarter of 2023 would be weak, but positive. However, if the current macroeconomic conditions persist, then, output growth in the fourth quarter may be much weaker than the third quarter of 2023, though also positive.”
They noted that Nigeria’s private sector business activity dipped into negative territory in October 2023, making it the first contraction since March this year, causing the Q4 to kick off on a weak note as the headline Purchasing Managers’ Index (PMI) declined by 2.0 index points to 49.1 in October from the 51.1 reported in September.
According to the analysts, the contraction of October 2023 PMI was driven, mainly, by elevated prices of inputs which dampened manufacturers’ demand as new order slowed down and consequently, led to depressed output during the period.
They reported that the rise in the cost of inputs was further exacerbated by the continuous depreciation of the domestic currency coupled with the lingering effects of fuel subsidy removal.
The firm’s researchers further noted that Nigeria’s PMI has therefore maintained a downward trajectory since May 2023, except for the September print which indicated an uptick of 0.9 index points above the preceding month, reflecting that private sector business activities are yet to be fully restored to their pre-pandemic levels owing to the prevalence of challenging macroeconomic conditions and shocks.
