WorldStage Newsonline-- Analysts at FBN Capital, the investment banking subsidiary of First Bank Group have forecast a positive outlook for Nigeria's economy this year with a gross domestic product (GDP) growth projection of 8.1 per cent from 8.0 per cent in 2011 and 7.9 per cent in 2010.

The FBN Capital latest outlook report on Nigeria foresaw the GDP climbing gently to 8.3 per cent in 2013, with the growth expected to be driving again by the non-oil sector.

“Private consumption remains robust. A recovery in oil production following the Niger Delta amnesty will play a supporting role,” the report said.

Nigeria is expected to achieve a double digit growth in the medium and long term for it to meet its vision 20: 2020 target, and the analysts said this is possible if the government wholeheartedly pursue its reform agenda.

The report acknowledged the positive start made by the government with the deregulation of the downstream of the oil industry, which had sparked up protests across the country, but advised that the greatest challenge with the reforms would be for the authority to hold its nerve against opposition from vested interests.

But the report advised that some additional palliative measures may be required to fully win the deregulation argument.

“If it holds firm on one reform, it becomes emboldened to implement the next, which could be the new electricity tariff, the petroleum industry bill or the sovereign wealth fund,” the report said.

On fiscal consolidation, the analysts also acknowledged the progress made so far, saying, the government was moving to overcome the fiscal laxity of its predecessor, and thereby ease pressure on forex and interest rates.

“The progress is necessarily gradual because of the predominance of recurrent spending in the budget. Fiscal and monetary policy, if not harmonised, are now set with a shared mindset. In our view the policy rate has peaked at 12.0 per cent.”

They also warned that pressure on the currency will not go away, even though the CBN held its objective of exchange-rate stability dear.

They advised that the apex bank had to confront resilient forex demand and an expected softening of oil prices this year.

“Since it is wedded to the managed rate, we see another adjustment to the central point in 2012,” the report said.

The analysts also had good news for investors in the stock market, forecasting that it would outperform fixed income this year.

“We are positive on equities for 2012 but neutral on fixed income as a broad asset class,” the report said.

“Our end-2012 target for the All Share Index is 23,500, 14 per cent over December 31, 2011 levels.

“Our view is underpinned by attractive valuation for banks in particular. Within the fixed income space, the long end of the curve appeals to us.”