CEM REPORT, ECONOMY | Experts have predicted stronger economic growth for Nigeria in the remaining part of 2023 as private sector performance is responding favourably to the current policy posture of the new government.
According to experts monetary policy interest rates and cost of living would stay elevated until the end of the year as a result of foreign exchange rates convergence and petroleum subsidy removal.
This was disclosed by Laoye Jaiyeola, the Chief Executive Officer, of the NESG, at the third Edition of the Mid-Year Review of 2023 Economic Outlook, organized by the Chartered Institute of Bankers of Nigeria Centre for Financial Studies (CIBNCFS), in Lagos.
“The Purchasing Managers’ Index (PMI) is considered a perfect predictor of economic growth momentum in Nigeria and across the globe.
“Hence, there is a likelihood for stronger than expected economic growth in the remaining part of 2023 as firms’ new orders, output growth rate, and inventory activities increase.”
Jaiyeola noted that the new policy regime would stimulate investors’ confidence in the economy but warned that initial policy shocks might increase inflationary pressure and worsen the cost-of-living crisis if not properly managed.
He added that the petroleum subsidy removal would push more people into the poverty bracket as higher inflationary pressure would erode the purchasing power of many households.
The NESG chief also noted that the convergence of foreign exchange market rates would reduce currency risks.
Commenting Biodun Adedipe, the Chief Consultant, Adedipe Associates Ltd., recommended that the Federal Government study countries that have gone through similar problems and learn from their solutions to get the economy back on track, adding:
“Are there lessons that we can learn from other jurisdictions, especially with our dependence on hydrocarbons; there are countries we can learn from like the Netherlands, Saudi Arabia, and Malaysia, which had the same currency trouble because of supply just the same way we are having today.
“So, what did the government do, they took a very firm stand, and the bottom line was that the Malaysian economy recovered the following year.
“How about India, India did the monetization that we also did in Nigeria, but it was a fiasco; that was in 2018.
“The outcome in 2018 showed clearly that the monetization of an economy that is largely driven by cash within a short window will cause trouble for the economy.
“So, the question should have been for us, when we wanted to do our own thing last year, to ask what lessons we can learn from them. And then take that on board and use that to find a way to execute our own,’’