There is imminent economic recovery in the offing this second quarter in spite of seeming weak economic performance, Bismarck Rewane, Chief Operating Officer (COO) of Financial Derivatives Company (FDC) has said.
He however fears that, there appears hurdles to the set recovery.
Referring to the projections of the International Monetary Fund (IMF) that Nigeria’s economy would grow by 2.5 per cent, up from the earlier 1.5 per cent, he said, “this is a confidence boost for the much needed investment inflows. However, the snares of insecurity, hyperinflation and policy uncertainty could force investors to take their funds elsewhere”.
The IMF and World Bank had at their spring meetings in Washington, expressed optimism about Nigeria’s economic recovery. The upward review of their projections rests heavily on optimal vaccine rollouts and stronger oil prices. The IMF revised its 2021 Gross Domestic Product (GDP) growth projection to 2.5 per cent from 1.5 per cent.
Rewane in a recent report said, facts emerging show that the negate rate of return on investment has started reducing.
According to him, FGN borrowing rate has also increased, with 12 month bonds up to nine per cent and projected to increase to 12 per cent, while marginal propensity to save is now 0.16.
He however frowned on the exchange rate policy. He said, foreign exchange (forex) rationing has continued and the Investors & Exporters (I & E) window is still controlled. “Limited forex supply has forced manufacturers to source over 90 per cent of forex from the parallel market. Forex intervention in the I & E window fell throughout March to an average of $66.63 million.
“Indicating a preference for reserves accretion at the expense of exchange rate alignment. So it is neither a yay nor nay situation…we take it as it is and hope for the best”, he said.