Nigeria’s economy is out of recession, a report said yesterday.
The economy broke out of a long slump in the second quarter with a median forecast for 1.55 per cent year-on-year growth, the Reuters report said.
The report also shows that South Africa quit shrinking with 2.2 per cent quarter-on-quarter growth.
South Africa and Nigeria have a lot in common. They are Africa’s two biggest economies and are both making their ways out of recession.
Nigeria entered recession late 2015. South Africa confirmed a technical recession in the first quarter of this year.
Reuters report shows strong growth will not show up until business confidence is restored.
The report indicated that Nigeria and South Africa have both benefited from a recovery in commodity prices since early 2016.
CEO of Rich Management in Nairobi Aly-Khan Satchu said: “Both countries have bounced off the bottom, but the sustainability is in question. Nigeria needs a single FX policy and South Africa needs more policy certainty.”
“We expect a return to positive year-on-year growth in Nigeria, helped by improved foreign exchange availability and a recovery in oil production,” said Razia Khan, head of Africa research at Standard Chartered.
Gaimin Nonyane, head of economic research at Ecobank, said she expected the positive growth trajectory to be maintained.
In South Africa, catering and accommodation sector was the worst performer in the first quarter. The sector contracted 5.9 percent. The key manufacturing sector shrank 3.7 percent.
“Recovery in manufacturing in the second quarter should help drive a quarter-on-quarter acceleration, but growth is expected to remain weak overall,” said Khan.
Khan added that agriculture should provide some lift to growth but other sectors are likely to only see negligible growth because of waning confidence.