Roundup: Nigeria risks falling back into protracted recession
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E-mail Xinhua, July 27, 2017
LAGOS, July 26 (Xinhua) -- Nigeria, Africa's most populous nation, risks falling back into recession, if strong and bold monetary and fiscal policies are not activated immediately to sustain its fragile recovery, an official has said.
Forecasts of key macroeconomic indicators point to a fragile economic recovery in the second quarter of the year, Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN) told reporters in Abuja, the nation's capital.
Emefiele spoke at the end the Monetary Policy Committee (MPC) meeting on Tuesday.
The MPC retained the Monetary Policy Rate (MPR) at 14 percent, Cash Reserve Ratio (CRR) at 22.5 percent, liquidity ratio at 30 percent and the asymmetric corridor at +200 and -500 basis points around the monetary policy rate.
According to the committee, easing the MPR will signal the committee's sensitivity to growth and employment concern by encouraging the flow of credit to the real economy.
In August 2016, Nigeria officially entered a recession for the first time in more than two decades. Its gross domestic product contracted by 2.06 percent in the second quarter, after shrinking by 0.36 percent in the first quarter.
Emefiele said the the Committee cautioned that the recovery seen this year could relapse in a more protracted recession if strong and bold monetary and fiscal policies are not activated immediately to sustain it.
The expected fiscal stimulus and non-oil federal receipts, as well as improvements in economy-wide non-oil exports, especially agriculture, manufacturing, services and light industries, all expected to drive the growth impetus for the rest of the year, must be pursued relentlessly, the apex bank chief told reporters.
According to him, the Committee expects that timely implementation of the 2017 Budget, improved management of foreign exchange, as well as security gains across the country, especially, in the Niger Delta and North Eastern axis, should be firmly anchored, to enhance confidence and sustainability of economic recovery.
Responding to this development, Michael Kwanashie, an economic expert, advocated diversification of the economy from oil to non-oil sectors to revitalize the country's economy.
Kwanashie observed that the only key thing that would bring Nigeria out of recession was rise in global oil price.
"Let me emphasize that President Buhari did not bring suffering to Nigerians but it is actually the source of Nigeria's revenue that crashed from 114 dollars a barrel to 48.8 dollars," he said.
"This has really affected the economy, it doesn't matter who is the president now, the situation had come and it is global phenomenon," he said.
In his contribution, Dr. Pat Kolawole Awosan, a public analyst, said the apex bank present sky-rocketing interest-rate of 14 percent is one of the factors that might cause economic relapse as the banks' interest rate must be reduced to a single digit to boost the economic recovery from the deep recession.
He said reduction of the interest rate to about 9 percent would go a long way to boost Nigeria's domestic economic activities and grow the country's GDP and encourage more cash flow within the domestic economy.
The Nigerian government had acknowledged the difficult phase the country's economy was undergoing, and assured his fellow compatriots that the nation would soon come out of the current economic recession and reclaim its greatness.
Causes for the economic downturn, which had set slowly but steadily, were many and varied. They include low oil price as well as the crash of the Naira against the U.S dollars.
These have combined to contract the economy by almost 10 percent between April and June this year.
However, the February inflation report released in March by the National Bureau of Statistics revealed that the rate slowed down in February for the first time in 15 months.
The World Bank had earlier projected that Nigeria will get out of recession in 2017 and the economy would grow by one percent. Enditem
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