Smarting from the bitter pills served in the outgoing year in different facets of life, many Nigerians desire a big break and look forward to a very prosperous year in 2020. But virtually all the indices from governance, fiscal, monetary policies, to mention just a few show things do not bode well for the economy. Ibrahim Apekhade Yusuf and Charles Okonji examine the issues
While majority of Nigerians are overly optimistic about the prosperity of the coming year, a few discerning Nigerians and external bodies rather than shout Eureka, want the populace to manage their expectations very well as a lot of things may not necessarily add up. Talk of forlorn hope.
The substantial real appreciation of the naira over the last year appears uncorrelated with macroeconomic fundamentals and is set to continue, driven by high inflation. Commodity terms of trade have deteriorated somewhat and will decline further, weighed down by lower oil prices. However, Nigeria’s real effective exchange rate has surged by around 20% since April 2018 and is now close to its high reached in mid-2016, prior to the exchange-rate devaluation in the wake of the oil-price shock.
Like Fitch Ratings, Vetiva Research shows a delicate sprout. Citing outcome of 2019 sub optimal performance, Vetiva’s outlook report highlights how several challenges facing the real sector have capped Nigeria’s economic growth. In his assessment of the broader economy, Yusuf said, economic growth may remain subdued at around 2% by 2020 as consumer demand, as well as private sector investment, will most likely remain weak, a development, which resonates with the position of World Bank and the International Monetary Fund that growth will prime at 2.1% and 2.5% respectively, which is below the population growth rate of some 3%, implying per capita income will contract further, making more Nigerians poorer.
The CBN is expected to maintain status quo by continuing to inject liquidity in the currency market to protect the local currency at current levels against the US dollar. However, its ability to intervene in the foreign exchange market could be limited if external reserves sustains its downward trend which could be triggered by lower oil prices and weak investor confidence.
Besides, they note that performance of trade sector in 2020 will be shaped by the direction of government policies. In our opinion, continued protectionist measures of government will most likely limit growth in 2020.
Cannot be when this 👇 is happening daily across different locations
Yes
Those who choose to are free to do so. Those whose heads are with God will get over their “a whole me, I don big pass dis and dat” mentality and look for something legitimate to augment their deplorable situations. It is not rocket science. Poor or not, YOUR OWN CHOICE!
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