In Nigeria, GDP growth was deceptive in Q2. It decelerated to +1.5% y/y from +2% y/y in Q1. A weak performance was expected since the fiscal policymaking process was sluggish, perhaps even more than usual. We expect a mild acceleration in H2, given the adoption of this year’s budget and expected increase in spending. However, this recurrent cyclicality of fiscal spending, as well as the difficulty to stabilize the oil output, weighs down on a wider recovery. As a result, we revise downwards our 2018 GDP growth forecast from +2.5% to +2% and the 2019 projection from +3.5% to +2.5%. Given the fiscal cycles, the presidential election in April 2019 is a downside risk to the overall growth performance. However, the growth deception is not detrimental since Nigeria continues to benefit from a quite dovish financial environment. Capital inflows in H1 helped foreign reserves to reach USD47bn in May (9 months of import over, compared to 6 months one year ago).
