LBS Monthly Report – The State of the Nigerian Economy, April 2024

Global Economic Trends Signal Optimism Amidst Political Uncertainty

The global economic landscape is experiencing a mix of optimism and caution as various indicators point towards growth and stability, while political uncertainties loom large in several key regions.

In the United States, the latest employment data paints a rosy picture, with 303,000 new jobs added in March and unemployment dropping to 3.8%. Additionally, the surprising 3.1% year-on-year growth in the last quarter of 2023 has bolstered confidence in the US economy. Despite a marginal rise in inflation to 2.5% in February, Federal Reserve Chair Jerome Powell remains optimistic, expecting inflation to taper towards the Fed’s 2% target. However, reservations about an imminent rate cut signal a cautious approach from the Fed.

Meanwhile, global stock markets have recorded their best first-quarter performance in five years, with the MSCI index gaining 7.7% in 2024, the highest since 2019. The surge is attributed to the AI boom, with companies like Nvidia witnessing remarkable market gains, adding over $1 trillion in market value in the first three months of the year.

In Europe, positive economic indicators are emerging, with European banks’ shares hitting a six-year high and hopes of an ECB rate cut boosted by inflation data from France and Italy. The Bank of Japan’s decision to raise interest rates for the first time since 2007 marks a significant shift, ending its negative interest rate policy.

Amidst these economic developments, corporate restructuring and strategic decisions are reshaping industries. Unilever’s announcement of a restructuring plan, involving a 6% reduction in employment and the spin-off of its Magnum and Ben and Jerry’s ice cream division, reflects ongoing shifts in the corporate landscape.

On the political front, 2024 is poised to be a year of significant elections, with 46 countries and an estimated 4 billion voters participating. In India, the world’s largest democracy, elections are scheduled from April 19 to June 1, while the UK and USA are also gearing up for elections, expected on or before January 28, 2025. The outcomes of these elections, particularly in the highly contested United States, could have profound geopolitical implications, shaping the global landscape for years to come.

Despite the economic optimism, political uncertainties in various regions, including South Africa, where the ANC is expected to win the upcoming elections from May to August, add a layer of complexity to the global outlook. In Nigeria, the Central Bank has reported significant foreign portfolio investments, driven by favorable yield differentials and stability in the naira.

As the world navigates through economic fluctuations and political transitions, stakeholders are closely monitoring developments, with the hopes of sustaining growth and stability in the face of uncertainty.

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