Analysis of Pension Operating Environment Q1 2022
National Pension Commission (PenCom) has released its report for the 1st quarter of 2022 for the Pension Industry.
PenCom in its report gave an analysis of the pension operating environment for Q1, 2022. PenCom stated in the report that the data used for the analysis is sourced from the S&P/FMDQ Sovereign Bond index, National Bureau of Statistics: Nigeria Gross Domestic Products Report Q3 2021 and Nigerian Stock Exchange.
Below are the analyses;
Macroeconomic Development
The Nigerian Gross Domestic Product (GDP) grew by 3.11% year-on-year (Yr-on-Yr) in real terms in the first quarter of 2022 (Q1:2022), signifying continued positive growth over the last four quarters since the recession witnessed in 2020. The Q1:2022 growth rate was higher than the 0.51% growth rate recorded in Q1:2021 by 2.60% points, but lower than the 3.98% recorded in Q4:2021 by 0.88% points, indicative of a continuous recovery. However, quarter on quarter, real GDP grew at -14.66% in Q1:2022 compared to Q4:2021, reflecting lower economic activity than the preceding quarter.
In the quarter under review, aggregate GDP stood at ₦45,317,823.33 million in nominal terms. This performance is higher when compared to the first quarter of 2021, which recorded aggregate GDP of ₦40,014,482.74 million, indicating a year-on-year nominal growth rate of 13.25%. The nominal GDP growth rate in Q1:2022 was higher comparative to the 12.25% growth recorded in the first quarter of 2021 as well as the 13.11% growth recorded in the preceding quarter (Q4:2021).
Headline inflation (Yr-on-Yr) was 15.92% in Q1:2022 compared to 15.40% in Q4:2021.The food index rose to 17.20% compared to 15.63% in Q4:2021. Core inflation, which excludes the price of Agricultural Goods, was 13.74% (Yr-on-Yr), up from 13.41% in August 2021.
Developments in the Capital Market; Stock Market and Bond Market
The Stock Market
Activities in the Nigerian Stock Market witnessed an improvement in Q1:2022 as the Nigerian Stock Exchange All Share Index (NSE-ASI) and market capitalization closed at 46,965.48 points and ₦25.31 trillion compared to 42,716.44 points and ₦19.76 trillion in Q4:2021 indicating an increase of 4.74% (ASI) and 12.31% (Mkt Cap), respectively.
The Bond Market
According to the S&P/FMDQ Sovereign Bond Index, which tracks the performance of sovereign debt publicly issued by the Federal Government of Nigeria, bond price as at 31 March 2022 (Q1:2022) stood at 618.54 basis points compared to 569.79 basis points as at 31 December 2021 (Q4:2021). This represented a 4.10% increase in price during the period under review. However, yield to maturity dropped by 0.87% to 10.90% in Q1:2022 from 11.77% in Q4:2021.
Check below for PensionNigeria breakdown of all the important aspects of the PenCom 1st Quarter 2022 Report
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