A Research Economic Outlook Report released by FBNQuest has indicated that Nigeria’s Gross Domestic Product (GDP) will grow by 3.1% in 2024.
The report noted that market yields are expected to remain high this year, despite the current economic challenges, outlining the firm’s perspective on the macroeconomy, socio-political environment, and capital market featuring views on traditional asset classes (fixed income and equities). It also includes expectations for the current year.
Also, the growth is attributed to factors such as the tight monetary policy that the Central Bank of Nigeria (CBN) is expected to sustain, as well as a sizable supply of Federal Government of Nigeria (FGN) paper which will be driven by domestic borrowings of around NGN6.1trillion naira.
“Despite the myriad headwinds confronting the economy, such as low-single-digit GDP growth, high inflation rates, and downward pressure on the naira exchange rates, the Government’s steadfast commitment to policy reforms holds the potential to yield favorable economic outcomes,” said Tunde Abidoye, Head of Equity Research at FBNQuest.
He underscored that the proposed tax reforms’ implementation is poised to incrementally elevate non-oil revenue from its current sub-5% of GDP to the high single digits. Ultimately, this trajectory aligns with the Federal Government’s medium-term objective of reaching 8% non-oil revenue as a proportion of GDP.
“We need strong policy interventions and concerted efforts to strengthen tax compliance and encourage investments, especially at the base level, for increased business productivity and sustainability,” he added.
In light of the rich valuation levels in the equity market, FBNQuest anticipates a correction in the equity markets in the next few months, with an expected market return of approximately 10% in 2024.