Economic outlook getting better, Adedipe, others claim

Chief Consultant of B. Adedipe Associates Limited, Dr. Biodun Adedipe and Director, Monetary Policy Department of the Central Bank of Nigeria (CBN), Dr. Hassan Mahmud, said the prospect of the country’s economy is getting better but warned the speed of growth could be stalled by persisting headwinds.

The economists spoke at the Mid-year Economic Review and Outlook 2021, organised by the Chartered Institute of Bankers of Nigeria (CIBN) Centre for Financial Studies in collaboration with B. Adedipe Associates.

They noted that the pessimists take figures out of context. Adedipe noted that the demand for hydrocarbon would continue to improve as the global economy recovers. If that happens, he said, “Nigeria’s economy would be better”.

He, however, said the disproportionate rise in imports was a concern. Yet, he said machinery accounts for a high portion of the import, which signifies a near-term rise in local manufacturing.

“The major concern of the monetary policy is to see inflation drop and credit affordable, while unemployment falls. If these happen, you would see the misery index improve,” he noted.

With oil remaining the major foreign earner, he maintained, the country would need to diversify the external sector.

Mahmud said uncertainty was still high despite the positive outlook. He listed slow uptake of COVID-19 vaccine, negative exchange rate pass-through weak export, increased import demand, insecurity, high debt servicing cost, low capital inflow and infrastructural deficit as some of the key challenges facing the economy.

The challenges, according to him, could slow the recovering process. He was, however, positive the country would get out of the sluggish growth mould soon.

“If the CBN forecasts for GDP growth are sustained and there is improved vaccination and the health hazards and lockdowns are not resurfacing, we will see GDP getting close to three per cent by the end of 2021.

“We will also see the inflation number coming down less than 13 per cent by the end of the year and further down to the NBS projection of single-digit by 2022 or the middle of 2022,” he said.

The President/Chairman of the Council of CIBN, Dr. Bayo Olugbemi, said the third wave of the COVID-19 pandemic threatened to undermine the modest growth achieved so far.

The nation, he said, “also contends with persistent macroeconomic issues such as double-digit inflation currently put at 17.75 per cent, which erodes purchasing power and the value of savings. There is a high unemployment rate as well security issues such as rampant kidnappings and hostilities inflicted by terrorist groups, bandits and criminal elements in the society.

“As these issues continue to plague the normal conduct of economic activities, it goes without saying that there is a strong need for further guidance to help individuals and businesses make informed and strategic decisions that will help them weather the storm.”