Nigeria is treading on thin ice, if the ice breaks, we fall into ice-cold recession   

26 September 2018 : The leaping inflation and the excessive pressure on the external reserves created by the capital flow reversal is increasing becoming a menace for the Nigerian economy, CBN warns.


The surge of the reversal of capital flow is displayed by the prominent bearskins trend in the equity market despite the exchange rate being stable for the same period. 


After a year of rebounding from the worst decline in 25 years, it is most likely that we may slip into economic recession yet again. The situation is very similar to that of South Africa, as it unexpectedly slid into recession, shrinking 0.7% in the Q2’18. Unfortunately, its doom was fueled by diminutions in agriculture, transport, trade and manufacturing industries.


According to Godwin Emefiele, CBN governor, the MPC members are quite concerned that with the economy moving at a tortoise speed: it slowed to 1.95% in Q1’18 and 1.5% in Q2’18, it may become very difficult for us to exit recession. This sluggishness is due to the oil sector, with strong linkages to employment and growth in the key sectors of the economy”. The potential impact of liquidity injection from election-related spending, and increase in FAAC distribution, which is rising in tandem with an increase in oil receipt, is another suspected threat to the nation’s economy.


The increase in flooding cases along with security challenges will most likely lead to the food prices skyrocketing contributing to the uptake in the headline inflation .


The fiscal authorities ought to intensify the implementation of the Economic Recovery and Growth Plan (ERGP) to stimulate economic activities, bridge the output gap and create employment. Moreover the Nigerian government needs to speed up the implementation of the 2018 budget to help boost sustainable economic recovery and to facilitate passage of the Petroleum Industry Bill to increase contribution to the overall GDP.


Reporting for EasyKobo on Wednesday , 26 September 2018 in Lagos, Nigeria


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