Indications are that the economic recession that hit the country is gradually easing off as Nigerian private sector activity expanded for a second straight month in February, driven by a rise in new business despite a fall in export sales a survey conducted by Stanbic IBTC has shown. The Markit Stanbic IBTC Nigeria Purchasing Managers’ Index (PMI) rose to 52.2 last month after rising to 51.9 in January, the strongest reading since December 2015. A reading above 50 denotes growth.
Economists expect the Nigerian economy to slowly emerge from recession this year, buoyed by improved government spending and dollar availability.
“The faster than anticipated recovery in the economy may not be unrelated to the fact that survey respondents continue reporting an expansion of output, perhaps due to increased supply of FX needed for import activity and domestic investment,” said Ayomide Mejabi, Economist at Stanbic IBTC Bank.
The central bank has increased forex sales on the official market in recent days after effectively devaluing the naira for individuals, offering to sell them dollars at about half the premium charged on the black market.
Nigeria’s economy suffered its first annual contraction in over two decades last year owing to lower oil income and a dollar shortage as the country battled a recession. Mejabi said output prices continued to rise in February, but the pace was significantly slower and fell to their lowest level since January 2016.
On Wednesday central bank’s PMI report said private sector activity slowed in February as new orders and production levels fell due to a shortage of hard currency that made it difficult for companies to source raw materials. The Stanbic IBTC Markit report said an overall increase in new business led to a rise in purchasing activity as companies added to their inventory at a faster rate and that growth occurred despite a fall in new export sales.
