The Nigeria Economic Summit Group (NESG) revealed that Nigeria would experience stronger economic growth in 2023 as firms’ new orders, output growth rate, and inventory activities increase.
This was disclosed by Mr. ‘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), on Tuesday, in Lagos.
The NESG boss revealed that Nigeria’s private sector performance is notably responding favourably to the current policy posture of the new government.
Purchasing power
Jaiyeola revealed that there is a likelihood for stronger than expected economic growth in the remaining part of 2023 as firms make new orders, he said:
- “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.”
He predicted that initial policy shocks might increase inflationary pressure and worsen the cost-of-living crisis if not properly managed; urging that convergence of foreign exchange market rates would reduce currency risks adding that the new policy regime would stimulate investors’ confidence in the economy.
Interest rates
The NESG chief also noted that monetary policy interest rates would likely rise until the end of the year, citing that initial policy shocks from foreign exchange rates convergence and petroleum subsidy removal would heighten the cost of living.
He noted that this act would push more people into the poverty bracket as higher inflationary pressure would erode purchasing power of many households.
In the event Dr ‘Biodun Adedipe, the Chief Consultant, Adedipe Associates Ltd., urged the Federal Government to learn from countries that had gone through similar problems, 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,’’
Nigeria’s economy has been hit by shocks following reforms by President Tinubu to operate a managed float for the currency and the removal of fuel subsidies which has seen fuel consumption in Nigeria drop.
