- Economic and financial experts reacted to CBN Governor Emefiele's warning of another economic recession
- Some of the experts countered Emefiele's view, saying there are no indications that the country is heading towards another another recession
- However, the DG of LCCI, Muda Yusuf, agreed with Emefiele that Nigeria may be plunged into another recession if the economy continues to run on unviable fiscal regime
Some economic and financial experts have said the country’s economy is not under threat of recession as all indices have shown consistent improvement since 2018, against the warning by the Central Bank of Nigeria (CBN)'s Governor Godwin Emefiele
Emefiele had warned on Wednesday, May 23, that the high rate of unemployment may push the country into economic crisis.
However, Daily Trust reports that the experts said the consistent growth Nigeria has recorded since it exited recession has insulated against any recession soon.
Johnson Chukwu, the managing director of Cowry Assets Management, told the newspaper that the country was not in danger of recession given the recent indices.
Chukwu said: “I know that the trade war between the United States and China has led to some analysts speculating that if it drags for too long, it can tick the world into a global recession. The implication would be a reduced demand for our crude oil and that is where we will get the drag.”
He, however, highlighted the circumstances that will make the country worry about recession.
Chukwu said from the domestic economic activities, if the insecurity from the northeast and northwest affected agriculture to a near zero growth, “then we should worry. Otherwise, the growth in some sectors has the capacity to keep the country above recession.”
On his own part, the head of research at Agusto & Co, Jimi Ogbobine, said the technical definition of recession was that the economy would record two consecutive quarters of contraction.
Ogbobine said: “Maybe we are not under that immediate threat, because, also, different reputable agencies have predicted between two to three percent growth and that does not reflect a recession.
“But, with a 2.5 percent growth, what we will experience is an erosion of consumer purchasing power because the population growth rate is outstripping GDP growth. That is the real threat.”
Bismark Rewane, an economist and the managing director of Financial Derivatives, said the Nigerian economy would not fall back into recession.
He reportedly gave the assurance at the USA Fair 2019 on Tuesday, May 22, in Lagos while speaking on “Forecast and Recommendations for the Nigerian Economy in Buhari’s Second Term”.
According to him, Nigeria’s GDP at $482bn, growth rate at two percent, and the population at 190 million are indicators of an economy on a path of growth.
He noted that the real estate sector, which had suffered a consecutive decline in previous quarters, grew in the GDP report of Q1, 19; indicating that the economy would continue to expand.
Rewane, however, suggested a power sector reform which should include the conversion of the N1tn power sector debts into equity and a cost-reflective tariff as a way of deepening economic growth.
Other analysts’ suggestions are investing in new pipelines; ending financial waivers and exemptions; listing NNPC on the stock market; reducing petrol subsidy in 2019 and scrapping it in 2020, and a change in the Foreign Exchange (FOREX) market structure.
However, in line with Emefiele's warning, the director general of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, said Nigeria may be plunged into another recession if the economy continues to run on unviable fiscal regime, unsustainable indebtedness, as well as huge cost of governance.
Meanwhile, Legit.ng earlier reported that Emefiele identified poverty and unemployment as the country's major problem.
The CBN governor spoke in Lokoja, during a three day sensitisation seminar for bank customers tagged CBN Fair.
Represented by the assistant director, corporate communications department of the CBN, Emefiele said the CBN under his leadership has been re-positioned to be highly professional, people-focused, apolitical.
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