October 2021 Monthly Economic Report

CENTRAL BANK OF NIGERIA

ECONOMIC REPORT

October

2021

ABOUT THE REPORT

The Central Bank of Nigeria (CBN) Economic Report presents economic developments in Nigeria, intended for dissemination to the public. The Report, which is published on monthly and quarterly basis, provides insights on current developments in the real, fiscal, financial, and external sectors of the Nigerian economy, as well as on global issues of interest. It also reflects the policy initiatives of the CBN in pursuit of its mandate.

The Report is directed at a wide spectrum of readers, including economists, policymakers, and financial analysts in government circles and the private sector, as well as the wider public. Subscription to the Report is available without charge to institutions, corporations, embassies and development agencies. Individuals, on written request, can obtain any issue of the publication for free. Please direct all inquiries on the publication to the Director of Research, Central Bank of Nigeria, P.M.B. 187, Garki, Abuja, Nigeria. The Report is also available for free download from the CBN website:www.cbn.gov.ng

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Contents
ABOUT THE REPORT...................................................................................................	i
EXECUTIVE SUMMARY ..............................................................................................	1
1.0. GLOBAL ECONOMIC DEVELOPMENTS ..............................................................	3
1.1 Global Output Growth ........................................................................................	3
1.2. Global Inflation...................................................................................................	5
1.3. Global Financial Markets ...................................................................................	6
1.4. Global Commodity Market ................................................................................	8
2.0. DOMESTIC ECONOMIC DEVELOPMENTS........................................................	11
2.1. REAL SECTOR DEVELOPMENTS .......................................................................	11
2.1.1. Economic Activities.......................................................................................	11
2.1.2. Consumer Prices ...........................................................................................	11
2.1.3. Crude Oil Market Developments .................................................................	14
2.1.4. Socio-Economic Developments....................................................................	14
2.2 FISCAL SECTOR DEVELOPMENTS...................................................................	16
2.2.1 Federation Account Operations....................................................................	16
2.2.2. Fiscal Operations of the Federal Government ............................................	18
2.3. MONETARY AND FINANCIAL DEVELOPMENTS ............................................	22
2.3.1. Monetary Developments .............................................................................	22
2.4. EXTERNAL SECTOR DEVELOPMENTS...............................................................	31
2.4.1 Trade Performance ........................................................................................	31
2.4.2 International Reserves...................................................................................	34
2.4.3 Foreign Exchange Flows through the Economy ...........................................	35
2.4.4 Foreign Exchange Market Developments ....................................................	36
2.4.5 Exchange Rate Movement ............................................................................	36
2.4.6 Foreign Exchange Turnover at the I&E Window ..........................................	36
2.5 Economic Outlook...........................................................................................	38 I

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Tables
Table 1: Global Purchasing Managers' Index (PMI) ...................................	3
Table 2: Summary of Global Inflation Rates ..............................................	5
Table 3: EMEs Currencies' Rates to the US dollar .....................................	7
Table 4: Agricultural Export Commodities for October 2021 ..................	10
Table 5: Manufacturing and Non-Manufacturing Sector PMIs................	11
Table 6: Federally-Collected Revenue and Distribution to the Three-Tiers
of Government (NBillion) ...............................................................	17
Table 7: Allocations to the three tiers of Governments (NBillion)..........	18
Table 8: FGN Retained Revenue (NBillion) .............................................	18
Table 9: Federal Government Expenditure (NBillion).............................	19
Table 10: Fiscal Balance (NBillion) ..........................................................	20
Table 11: Money and Credit Growth over preceding December (Per cent)
........................................................................................................	23
Table 12: Components and Uses of Reserve Money (₦ Billion) ..............	24
Table 13: Nigerian Exchange (NGX) Limited Indices ................................	29
Table 14: Listings on the Nigerian Exchange Limited at end-October 2021
........................................................................................................	30
Figures
Figure 1: PMIs of Selected Advanced Economies......................................	4
Figure 2: PMIs of Selected EMDEs.............................................................	4
Figure 3: Global Stock Market Equity Indices ............................................	6
Figure 4: 10-Year Government Bond Yields in Selected Countries............	6
Figure 6: EMEs Currencies' Values to the US dollar...................................	7
Figure 7: Trends in Crude Oil Prices...........................................................	9
Figure 8: Price Changes in Selected Metals, October 2021.......................	9
Figure 9: Headline, Food and Core Inflation (Y-o-Y) ................................	12
Figure 10: Headline, Food and Core Inflation (M-O-M)...........................	12
Figure 11: Covid-19 Statistics ..................................................................	15
Figure 12: Federal Government Expenditure (NBillion)..........................	19
Figure 13: FGN External and Domestic Debt Composition (NBillion) .....	21
Figure 14: Composition of External and Domestic Debt Stock ................	21
Figure 15: Consumer Credit ....................................................................	24
Figure 16: Composition of Consumer Credit in Nigeria (per cent) ..........	25
Figure 17: Open Market Operations (OMO) (NBillions)..........................	26
Figure 18: Interest Rate Trend ................................................................	27
Figure 19: Average Deposit and Lending Rates (Per cent) ......................	27
Figure 20: Market Capitalisation and All-Share Index .............................	28
Figure 21: Volume and Value of Traded Securities..................................	29
Figure 22: Export, Import and Trade Balance (US$ Billion) .....................	31
Figure 23: Import by Sector, October 2021.............................................	32
Figure 24: Capital Outflow (US$ Billion) ..................................................	34
Figure 25: External Reserves and Months of Import Cover (US$ Billion) 35
Figure 26: Forex Sales to Authorised Dealers, August 2021 (US$ Billion)36
Figure 27: Turnover in the I&E Foreign Exchange Market (US$ Million) .37
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ECONOMIC REPORT, OCTOBER 2021

EXECUTIVE SUMMARY

The global economy continued its recovery in October 2021, despite the threat of the Delta variant of COVID-19, as indicated by the average J.P. Morgan Global Composite Purchasing Managers' Index (PMI), which rose to 54.5 index points in October 2021, from 53.3 index points in September 2021. The growth was reinforced by sustained fiscal and monetary policy support and broader vaccine coverage. Growth in both Advanced Economies (AEs) and Emerging Markets and Developing Economies (EMDEs) improved, as PMIs in major economies within the regions expanded. The inflation rate in most economies increased because of supply chain constraints in the face of rising demand and input cost.

Positive sentiments buoyed activities in the global financial market, being the anticipated effects of the recently announced policy support in the US. Regarding the international oil market, crude prices rose to a seven-year high, on the back of supply constraints and drawdown of oil reserves in major economies. Consequently, the average price of the OPEC crude basket stood at US$82.11 barrels per day (bpd), relative to US$73.89 bpd in September.

As indicated by the PMI, domestic economic conditions improved in October 2021. The manufacturing sector led the economic growth, as the non-manufacturing sector's performance waned slightly. Four out of five subsectors under manufacturing recorded positive growth, while the raw material inventory subsector declined. In the non-manufacturing sector, growth was recorded in business activity and inventory subsectors, while new orders and employment declined. The headline inflation moderated to

15.99 percent, attributed to input cost and improved harvest. The food and core components followed the same trend.

The fiscal operations of the Federal government resulted in a narrower deficit, compared to September, as fiscal conditions improved with the increase in crude receipts. However, total expenditure and retained revenue were below their respective benchmarks in the month.

Developments in the monetary sector showed sustained growth in broad money supply (M3), driven largely by the increase in domestic claims, particularly credit to the private sector. There was a net withdrawal of liquidity from the banking system; hence the indicative money market rates rose relative to their levels in September 2021. Notwithstanding, the various indicators showed that the financial system was sound and stable.

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