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Euro-Area Economic Confidence Rises

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Operations Inside ThyssenKrupp Escalator Factory in Hamburg

Euro-area economic confidence rose for a second month in May as the European Central Bank prepares to present updated economic projections that could provide further clues about the impact of its stimulus program.

An index of executive and consumer sentiment increased to 104.7 from a revised 104.0 in April, the European Commission in Brussels said on Monday. That’s the highest level in four months and compares to a median estimate for an increase to 104.4 in a Bloomberg News survey of economists.

ECB officials meeting in Vienna on Thursday are expected to keep their ultra-loose policy unchanged again after they expanded quantitative easing by a third to 80 billion euros ($89 billion) in March and cut the deposit rate further below zero. Vice President Vitor Constancio said last week that he’s optimistic the ECB will reach its inflation goal by 2018, reflecting the upgraded stimulus and rising oil prices.

“We expect both the inflation and growth projections to be revised upward; that’s going to be the focus in this week’s meeting,” said Johannes Gareis, an economist at Natixis in Frankfurt. “The ECB will stress the importance of QE now that you can actually see some positive effects in the data.”

Eurostat will say on Tuesday that the inflation rate rose to minus 0.1 percent in May from minus 0.2 percent the previous month, and unemployment was unchanged at 10.2 percent in April, according to separate Bloomberg surveys.

Sentiment among consumers rose to minus 7.0 from minus 9.3 the previous month, according to Monday’s report. Confidence in retailing and construction improved as well, while a measure for industry remained unchanged and a gauge for services declined.

In March, the ECB forecast euro-area growth of 1.4 percent this year, 1.7 percent in 2017 and 1.8 percent in 2018, with inflation of 0.1 percent, 1.3 percent and 1.6 percent, respectively. Asked in a Bloomberg Television interview whether he thinks consumer prices will rise faster in two years than currently predicted, Constancio said he “certainly personally expects” so.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Reps Kick Against N4 Billion Bailout Proposed For Aviation, Says Grossly Inadequate

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The House of Representatives has kicked against the N4 billion bailout proposed by President Muhammadu Buhari led administration for the aviation industry following the damages done by COVID-19 to the sector.

The House Committee on Aviation on Monday said the sector needs around N50 billion to mitigate COVID-19 negative effect and described the N4 billion proposed as grossly inadequate.

Addressing journalists in Abuja, they said other nations have started providing bailouts to the aviation industry to cushion the effects of the pandemic and protect jobs.

The committee led by Nnolim Nnaji, explained that the just concluded public hearing on the amendment bills for the review of some aspects of the civil aviation Acts had brought to the fore ‘the impending crisis in the aviation industry which require urgent attention’.

Nnaji said, “As a parliament, we are going to look into these demands and, more especially, to find out why the Nigeria Customs Service would not respect the President’s Executive Order on duty exemption and other palliatives meant to lighten the burdens of the airlines.

“The multiple entries for foreign airlines is equally an important concern raised by the operators which must be looked into.

“The aviation sector requires huge capital for infrastructural development.

“The Federal Government’s N4bn bailout to the airlines and some palliatives to the agencies (not yet released) is too small. The airlines need at least N50bn bailout funds to cushion the coronavirus effect.

“We are requesting that other mechanisms should be introduced as a support to avert the collapse of the aviation sector.”

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Economy

Infrastructure: Nigeria is Behind Other Emerging Markets – Moody’s Investors Service

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Moody’s Investors Service, a global credit rating agency, has said Nigeria’s infrastructure is behind most emerging market peers and needs at least $3 trillion to bridge the over 30 years infrastructure gap.

The agency disclosed this on Sunday during its first report on Nigerian infrastructure.

According to the report, the low tax base along with weak institutions and governance frameworks are hindering investment in infrastructure.

It would be recalled that the International Monetary Fund (IMF) had blamed Nigeria’s rising debt servicing cost and weak revenue generation for the nation’s low infrastructure and other capital expenditure in the country.

The Fund, therefore, compelled Nigeria to up revenue generation through the increase of Valued Added Tax (VAT) and the introduction of cost-reflective electricity tariffs to support weak government revenue, especially at a time when oil revenue has dropped by about 50 percent.

In the report, Kunal Govindia, the Vice President and Senior Analyst at Moody’s Investors Service, was quoted as saying that Nigeria’s fast-rising population will compound the nation’s pressure if nothing is done to arrest infrastructure deficit on time.

He explained that the COVID-19 pandemic has compounded the already low government funding capacity and poor customer affordability.

Its low government funding capacity and customer affordability has been weakened further by the COVID-19 pandemic and low oil prices,” he said.

The report noted that “Financial guarantors, multilateral development banks and local institutional investors will be important in helping finance infrastructure development.

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Nigeria Begs Buyer to Pay $9 for Crude Oil in April -NNPC

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NNPC

The Nigerian National Petroleum Corporation (NNPC) said the nation begged global crude oil buyers to purchase Nigerian crude oil at $9 per barrel in April when COVID-19 plunged oil Prices.

The Group Managing Director, NNPC, Mallam Mele Kyari said on Friday while addressing energy correspondents in Abuja.

In April, Brent crude oil, against which Nigerian oil is priced, declined to a record low of $15.98 per barrel, the lowest since 1999 when Saudi Arabia and Russia engaged in a price war.

“Actually, we sold oil at $9 per barrel in April, and practically we begged people to come and take,” Kyari stated.

The Managing Director said the nation produced 2.49 million barrels per day in April, saying 3 million barrels per day is feasible.

He added that the year had been a very difficult year for the energy industry and the world economy as a whole. He said the sector fundamentals had changed.

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