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Higher oil prices’ll drive Nigeria’s economy by 2.5% in 2022 – World Bank

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The World Bank has projected a 2.5 per cent economic growth for Nigeria in 2022, and 2.8 per cent in 2023.

This 2022 forecast is a slight upward review from the estimated 2.4 per cent growth in 2021.

According to the bank, higher oil prices and activities in the service sectors, such as telecommunications and financial services, will drive this slightly upward growth.

The Washington-based institution disclosed this in its latest Global Economic Prospects report released on Tuesday.

The report read in part, “In Nigeria, growth is projected to strengthen somewhat to 2.5 per cent in 2022 and 2.8 per cent in 2023.

“The oil sector should benefit from higher oil prices, a gradual easing of the Organisation of the Petroleum Exporting Countries production cuts, and domestic regulatory reforms. Activity in service sectors is expected to firm as well, particularly in telecommunications and financial services.”

It was, however, stated that the recovery from pandemic-induced income, employment losses, and inflation would be slow.

It added that issues of violence and social unrest, alongside emerging COVID-19 threats, would restrain economic activities in the non-oil sector.

“However, the reversal of pandemic-induced income and employment losses is expected to be slow; this, along with high food prices, restrains a faster recovery in domestic demand.

“Activity in the non-oil economy will remain curbed by high levels of violence and social unrest, as well as the threat of fresh COVID-19 flare-ups with remaining mobility restrictions being lifted guardedly because of low vaccination rates — just about 2 per cent of the population, had been fully vaccinated by the end of 2021,” the report stated.

It also predicted that per capita income is expected to be lower in 2022 than a decade ago in countries such as Angola, Nigeria, and South Africa.

The report read, “After barely increasing last year, per capita incomes are projected to recover only at a subdued pace, rising 1.1 per cent a year in 2022-23, leaving them almost 2 per cent below 2019 levels.

“In South Africa and Nigeria, per capita incomes are projected to remain more than 3 per cent below pre-pandemic levels in 2023.”

The report also said that global growth is expected to decelerate from 5.5 per cent in 2021 to 4.1 per cent in 2022, then 3.2 per cent in 2023.

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BUSINESS

Airbus cancels $6bn contract with Qatar Airways after paint fight

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Airbus has cancelled a $6bn contract with Qatar Airways for 50 of its new A321neo passenger jets, escalating a legal battle between the two companies over paint on the recently delivered A350s.

Qatar Airways called Airbus’s decision announced on Friday “a matter of considerable regret and frustration”.

In December, Airbus was taken to court by Qatar Airways in London, following a series of alleged problems with the Airbus A350 aircraft.

The airline complained the paint on the recently delivered Airbus A350s was cracking and peeling, exposing copper meshing used to insulate the aircraft against lightning strike.

It is seeking more than $600m in compensation after grounding the affected aircraft – 21 of its 53 A350 jets – claiming the paint issue is a safety risk.

The deal was reportedly worth $6.35bn when it was finalised in December 2017.

Qatar Airways published a video on social media on Friday of the scarred exterior of grounded A350 jets that the airline said underscored “serious and legitimate safety concerns”.

The European Union Aviation Safety Agency independently assessed the issue and found no safety concerns.

“There is no reasonable or rational basis” for Qatari regulators to have grounded the A350s operated by Qatar Airways, Airbus said in documents prepared for a London court hearing on Thursday.

It accused Qatar Airways of instigating the grounding as it was in its own financial interest to keep the aircraft on the ground in light of the coronavirus pandemic collapse in demand for air travel.

Qatar Airways rejected the claims in a statement on Friday.

“These defects are not superficial and one of the defects causes the aircraft’s lightning protection system to be exposed and damaged,” it said. “We continue to urge Airbus to undertake a satisfactory root cause analysis into the cause of the defects.”

An investigation by Reuters news agency showed at least five other airlines reported A350 paint or skin flaws since 2016, well before Qatar raised concerns in November 2020 when an attempt to repaint a jet in World Cup livery exposed some 980 defects.

Airbus has said it is looking at changing the design of anti-lightning mesh for future A350s, but insisted there is adequate backup lightning protection. It says Qatar is undermining global protocols by seeking leverage over safety.

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Wall Street caps worst week since start of coronavirus pandemic

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Stocks fell, capping the worst week since the outbreak of the pandemic roiled markets, with tech shares bearing the brunt of the selloff amid shaky company earnings and prospects for higher U.S. interest rates.

The S&P 500 closed below its 200-day moving average, a key technical level, for the first time since 2020. The tech-heavy Nasdaq 100 slid the most among major benchmarks Friday, led by a more than 20% plunge in shares of streaming giant Netflix Inc. Bitcoin tumbled in an extended selloff for cryptocurrencies, briefly falling below $38,000 to its lowest level in more than five months.

Volatility that has gripped markets this month showed little sign of letting up Friday, with the S&P 500 falling for a fourth day, extending losses in the period to 5.7% for the worst, albeit shortened, week since March 2020. Option expirations of more than $3 trillion helped add to market turbulence.

“This is the longest short week, I think, in history, right?” Jay Pelosky, founder and president of TPW Investment Management, said on Bloomberg TV. “It’s only been a four-day week and it feels like it’s been two weeks rolled into one.”

The U.S. company reporting season so far has been uneven, highlighting the risk that it may fail to enliven animal spirits in the stock market. While Netflix’s disappointing subscriber outlook sent its shares tumbling, while Peloton Interactive Inc. suggested it was poised to rebound after the darling of the stay-at-home trade was hit by a report of temporary production halts.

Markets are also bracing for rate liftoff by the Federal Reserve. Economists surveyed by Bloomberg expect policy makers to raise interest rates in March for the first time in more than three years and shrink their balance sheet soon after. Geopolitical tensions are also adding to the jitters. A report that Washington is allowing some Baltic states to send U.S.-made weapons to Ukraine stoked concerns about a standoff with Russia.

“There are plenty of risks in the global economy, including geo-political events,” wrote Ethan Harris, head of global economics at Bank of America Global Research. “However, in our view, the biggest near-term risk is right in front of us: that the Fed is seriously behind the curve and has to get serious about fighting inflation.”

Demand for havens pushed the 10-year Treasury yield down more than 10 basis points in three days to 1.76%, leaving the rate lower on the week, the first decline for the period in five weeks.

The selloff in equity markets has volatility indexes pricing more turbulence near term than in the future. The setup, known as an inverted VIX. Such an inverted curve has occurred four other times in the past year and all coincided with market bottoms.

“We’re all going to breathe an extra sigh of relief once this session finally closes and then we can put an end to this week, because it’s been painful all around,” said Adam Phillips, managing director of Portfolio Strategy at EP Wealth Advisors in Torrance, California.

Some of the main moves in markets:

Stocks

  • The S&P 500 fell 1.9% as of 4 p.m. New York time
  • The Nasdaq 100 fell 2.7%
  • The Dow Jones Industrial Average fell 1.3%
  • The MSCI World index fell 1.8%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%
  • The euro rose 0.3% to $1.1345
  • The British pound fell 0.3% to $1.3557
  • The Japanese yen rose 0.4% to 113.68 per dollar

Bonds

  • The yield on 10-year Treasuries declined five basis points to 1.76%
  • Germany’s 10-year yield declined four basis points to -0.06%
  • Britain’s 10-year yield declined five basis points to 1.17%

Commodities

  • West Texas Intermediate crude fell 0.7% to $84.91 a barrel
  • Gold futures fell 0.7% to $1,832.70 an ounce

SOURCE: BLOOMBERG

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BUSINESS

Bitcoin falls another 8% as cryptocurrencies extend steep losses

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Cryptocurrencies continued their dramatic slide on Saturday, with bitcoin losing nearly half of its value since hitting its November high.

Bitcoin, the world’s most valuable cryptocurrency by market value, tumbled about 8% on Saturday to trade just above $35,000. The coin hit a record high of $69,000 in November.

Meantime, ether, the second-largest cryptocurrency by market cap, sank nearly 10% to trade around $2,400.

The losses came on the heels of a Thursday dip in the stock market. Cryptocurrencies and traditional stocks have been falling in tandem this month, with investors concerned about how anticipated Federal Reserve interest-rate increases will affect the market.

A common investment case for bitcoin is that it serves as a hedge against rising inflation as a result of government stimulus, but analysts are saying the risk is that a more hawkish Fed may take the wind out of the crypto market’s sails.

There’s also concern U.S. regulators will further crack down on digital currencies.

Russia’s central bank proposed banning the use and mining of cryptocurrencies earlier in the week. Officials argued it posed threats to financial stability, citizens’ wellbeing and its monetary policy sovereignty. U.S. authorities have also been clamping down on certain aspects of the market.

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