Recession: Nigeria On Right Path Of Recovery- Analyst
Despite the gloom and doom in the short term, Nigeria seems to be on the correct path to recovery in the first quarter of 2017 with the impressively oversubscribed Eurobond deal boosting confidence towards the nation.
Research Analyst at FXTM, Lukman Otunuga, yesterday said the confidence international investors have shown towards the nation has bolstered overall sentiment. While noting that the country is still exposed to external and internal risks, Otunuga said “the longer-term outlook has turned positive, especially if the 2017 budget of recovery and growth is enacted correctly.”
Although there were some concerns over the Fitch downgrade obstructing the $1 Billion Eurobond issue, the offer was oversubscribed with investors placing more than $7.8 billion in bids.
This he said, marks a major turning point for Nigeria international investors foresee a bright future for the nation if it succeeds in its quest to diversify while breaking away from a recession. “The current momentum for the first quarter of the year has turned positive for Nigeria which should encourage the central bank to take action in a bid to retain further stability.”
“There is a strong likelihood that the optimism over the Central Bank of Nigeria (CBN) intervening to bridge the gap between the official and black market exchange may have played a part in the impressive Eurobond over subscription.
“Now Nigeria has received the much needed funding, markets will continue to observe the critical steps taken as the nation embarks on its quest to diversifying away from oil reliance to one that is self-sufficient and sustainable.
“The attributes for Nigeria to experience super normal growth are slowly falling into place and global markets have seen the unlimited potential if the 2017 budget of recovery and growth is enacted correctly” he stated.
Noting that dollar scarcity remains a pending issue with expectations rising over the CBN devaluing the Naira on the official exchange, Otunuga said a weak naira is still the recurrent theme with further depreciation expected as the combination of a resurgent dollar and pending CBN devaluation encourages bearish investors to act.
