Categories: Business

H2 2022: Decline in capital flows expected on UK recession fears —Analysts

FINANCE and economic experts at Proshare Limited have expressed worry that the rising fears of a recession in the United Kingdom (UK) could induce a pullback in Nigeria’s capital imports in the year’s second half (H2).

Recently released capital importation data by the National Bureau of Statistics (NBS) shows that already, capital imports declined by -5.04 per cent quarter-on-quarter (Q-o-Q) to hit $1.53 billion in second quarter (Q2) 2022.

Analysts see the Eurozone entering a recession on the back of economic disruptions occasioned especially by the cut in gas supplies.

They attribute the decline to the significant depreciation of the Naira in Q2 2022, noting that Foreign Direct Investment (FDI) contributed only 10 per cent to the country’s capital account in the period, while other less patient forms of capital accounted for 90 per cent.

According to the analysts, upgrading the country’s hard and soft infrastructure is a sine qua non for improving the volume of FDI imports.

Also the UK accounted for $781 million of the $1.53 billion received last quarter, with the UK being a major country of origin for capital imports to Nigeria.

Private sector productivity contracted in the Eurozone in August. S&P Global estimated the zone’s Purchasing Managers’ Index (PMI) at 49.6 in August down from a 49.9 reading in July.

Meanwhile, the Final Consumer Confidence Index came in at -24.9 in August which matched expectations but outperformed the -27 recorded in July.

Analysts consider the negative consumer confidence numbers a reason households would be pulling back spending just as the PMI figures indicate a contraction in the private sector.

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