Standard Chartered Bank has projected that the current Nigeria’s economic reform initiatives are anticipated to play a pivotal role in revitalizing Nigeria’s credit landscape by the year 2024.
The Global Chief Investment Officer at Standard Chartered Bank’s Wealth Management unit, Mr. Steve Brice stated this at the presentation of the Bank’s Global Market Outlook 2024 tagged ‘Sailing with the Wind’ in Lagos.
Brice noted that the reform agenda in Nigeria will bolster macroeconomic stability and tap into the nation’s substantial investment opportunities.
- “In Nigeria, an ambitious reform agenda is expected to support macro stabilization and unlock the country’s significant investment potential.
- FX reforms, cash reforms, and other economic reforms being undertaken by the present Government in Nigeria could help attract capital inflows and gradually address FX liquidity challenges.
- These reforms are expected to support a turnaround in Nigeria’s credit story in 2024,” he said.
African Continental Free Trade Area
Brice noted that the African Continental Free Trade Area (AfCFTA) agreement was set to create the largest free trade area in the world when measured by the number of countries participating.
The pact according to him connects 1.3 billion people across 55 countries with a combined GDP of US$3.4 trillion.
Consumer Price Index inflation
Brice said that headline Consumer Price Index inflation is expected to decelerate in 2024 in most key economies.
He said base effects, recently receding energy price inflation, and the lagged effects of policy tightening will help to slow price pressures.
- “Oil prices are a key source of upside inflation risk. Analysts expect the average Brent crude oil price to fall to $81/b in December 2024 and fall below $80/b in 2nd Half of 2025 due to expected inventory builds in 2025.
- However, recent activity in the Red Sea causing further tension in the Middle East could see a near-term upside to the risk premium.
- Despite expectations of slightly softer global growth in 2024, support for oil is still considerable,” he said.
Brice stated that global oil demand is expected to remain strong, helped by firm growth in Asia adding that any escalation of geopolitical risks could put further upward pressure on prices.
Financial market performance in 2024
On what lies ahead in terms of overall global strategic movements, Brice said the organization expects FOMC and UST rates to drive the overall financial market performance in 2024, incorporating a greater probability of rate cuts.
- “Furthermore, we will witness a potential unwinding of inflation fears, with an expected shifting of 10-year UST yields from bear steepening to bull steepening. We also predict that USD will depreciate – but this will be constrained.
- We will also see more commentary around whether China’s disinflation will impact the US and Europe – although early signs expect China rates to be lower for longer.
- All signs point to 2024 being another year defined by periodic volatility shocks due to geopolitics, elections, and global slowdown risk,” he said.
Global GDP growth
Brice said GDP growth is expected to slow marginally in 2024 as global financial conditions stay tight, and price levels may remain sticky on structurally high fiscal deficits, lagged monetary transmission effects, and labor-market tightness.
Against this evolutionary backdrop, Brice said the organization expects global GDP growth to slow marginally to 2.9% in 2024 from 3.1% in 2023.
- “Although there are several risks, including persistent inflation and geopolitical tensions, in 2024 we shall focus on the potential for growth in Asia, the Middle East, and Africa.
- Additionally, identifying new growth drivers in a fragmented global landscape presents us with opportunities for innovation and progress. By addressing these challenges, we can work towards a more prosperous future,” he said.