Weak Indicators Reduce Nigeria’s Economic Growth Optimism
President Muhammadu Buhari

Weak Indicators Reduce Nigeria’s Economic Growth Optimism

Key economic indicators are in stark contrast with expectations, from steep inflation rate position to high unemployment while the government continues to recording fiscal slippage.

Nigeria’s government is in the habit of spending more than what the policy authority generates. While economic observers said they don’t see this as an issue except that debt cost has proven to be a burden on government revenue.

Policy failures have kept Nigerians in the poverty loop, from poor currency management to unnecessary border closure without alternative sources while Nigeria’s central bank opens its vaults to the government for free funds in form of unsecuritised overdrafts.

The Federal Government decision to close the land border in 2019 worsened Nigeria’s inflation rate and the economy is yet to recover from the shock before the pandemic outbreak.

National Bureau of Statistics data shows that capital inflow keeps falling behind, along with the unfavourable balance of payment, indicating Nigeria’s weak trade position amidst foreign investors’ apathy for the local economy marred by multiple exchange rate systems.

Buckets of weak macroeconomic indices could slow down optimism over Nigerians economic growth expectations in the second quarter of 2021, according to various reports examine by MarketForces Africa.

Nigeria’s macroeconomic data have plunged due to pandemic-induced stress on productive segments of the economy as purchasing managers index signal a slowdown in recovery against expectation.

In the first quarter of the fiscal year 2021, after about a 2% drop in 2020, Nigeria gross domestic product expanded 0.51%, slightly faster than a 0.11% rise in the prior period.

It is the second consecutive quarterly growth since Nigeria’s economy dipped into recession in the Q3 of 2020, helped by easing Covid-19 restrictions and higher oil prices.

While the growth keeps Nigeria away from trough level experience a year earlier, the coldness has kept private sector performance on a low radar.

The rate of unemployment has remained high despite the government plan to lift some 100 million people from poverty. Unfortunately, with the high unemployment came a steep inflation level that has worsened Nigerians misery index.

Post-pandemic lockdown economic performance has not been impressive as the private sector of the economy struggles with inflation worries and naira devaluation.

A report released by the Monetary Policy Committee of Central Bank noted the marginal growth in the Manufacturing Purchasing Managers’ Index. Though weak, the policy authority sees the increase as a lead indicator of recovery of output growth following the easing of restrictions to curtail the spread of the Pandemic.

The unemployment condition remains stubbornly high at 33.3% in the absence of fresh data from the National Bureau of Statistics.

Total public debt is heading towards N40 trillion as the Federal Government continues unabated ramping up more debts, increasing the debt service burden on a tiny budget plan for more than 200 million people.

Nigeria’s heightened insecurity, rising food inflation, rising debt service payments and stalled reforms are major roadblocks to Nigeria’s recovery process, GlobalData said in a recent report.  

Nigeria has experienced significant currency depreciation due to a fall in external financial flows, portfolio investments and a rise in public debt which experts think may cast a shadow on recovery.

‘You cannot really know how much Nigeria is owing to the Central Bank until the end of the present administration’, MarketForces Africa gathers from sources.

In the first quarter of 2021, Nigeria’s public debt had printed at N33.1 trillion but FG has persistently access loans from the local market. In the first half of 2021, a total sum of N1.81 trillion was raised via treasury bills issuance.

Read Also: Nigeria’s Unemployment Rate Jumps to 33.3% in Q4-2020

Nigeria’s gross domestic product annual growth rate averaged 2.50 per cent from 2011 until 2021, reaching an all-time high of 6.88 per cent in the first quarter of 2011 and a record low of -6.10 per cent in the second quarter of 2020.

Weak Indicators Reduce Nigeria’s Economic Growth Optimism

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