The first half of the year was fraught with challenges both in the global and domestic economy. The global economy struggled under the weight of higher interest rates and sluggish growth.

In the US, GDP growth slowed in the first quarter of 2024 with improvements in the second quarter led by increased consumer spending. Simultaneously, China’s industrial production outpaced expectations, but weak domestic retail sales stifled its overall economic health. The UK economy saw improved growth in H1 2024 after a decline in Q4 2023.

The global oil sector was also faced with difficulty as declining import levels and geo-political tension led to volatility in pricing.

The domestic economy was also not devoid of challenges as real GDP growth grew slowly to 2.98% in Q1 2024, from 3.46% reported in Q4 2023, hampered by severe inflationary pressures and FX illiquidity. The oil sector showed signs of recovery but was insufficient to counteract the broader economic decline. Rising inflationary pressures due to structural issues led the monetary policy committee to implement aggressive rate hikes.

The Nigerian equities market experienced robust growth in activity level at the start of the year as the momentum from December persisted. However, volatility stemming from disappointing corporate earnings especially FMCG and stringent monetary policies pushed the market to a slight decline towards the latter part of H1 2024. Nevertheless, the market saw increased foreign participation.

Looking ahead, we anticipate minimal GDP growth with a large percentage projected to come from the oil sector, the non-oil sector is likely to face continued struggles on the back of elevated interest rates, exchange rate volatility and shrinking consumer spending.

Inflation is expected to start moderating and we do not foresee any further rate hikes.  We expect the already elevated rates to attract investors to the fixed income market channelling funds from the equities market. However, we could see some improved activities in the equities market as interim dividend announcements, cheap entry price and improved earnings might spur investor interest.

Please follow the link “2024 Midyear Review – Beyond the Reform Waves – Charting a Course Through Uneven Terrain” to view the full report.