FBNQuest, the investment banking and asset management subsidiary of FBN Holdings Plc recently published the FBNQuest Research Economic Outlook Report. According to the report, Nigeria's gross domestic product (GDP) is expected to expand by 3.1% in 2024.
The report highlights the firm's views on the macroeconomy, sociopolitical climate, and capital market, with a focus on traditional asset classes (fixed income and equity). It also offers outlooks for the current year.
Market yields are projected to stay strong this year, notwithstanding the current economic concerns. This is due to reasons such as the Central Bank of Nigeria's (CBN) tight monetary policy and a large supply of Federal Government of Nigeria (FGN) paper, which will be fuelled by domestic borrowings of around NGN6.1 trillion naira.
Tunde Abidoye, Head of Equity Research at FBNQuest, stated that “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."
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.
To access the full report, please visit: www.fbnquest.com
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