Rebasing GDP, CPI may not yield desired results – CFG

The CFG Advisory has expressed concern that the federal government’s move to rebase Nigeria’s Gross Domestic Product (GDP) and Consumer Price Index (CPI) might not yield the desired economic outcomes.

It stated this in a report titled ‘Nigeria 2025 Economic Forecast: From Reform Fatigue Quagmire to Sustainable Growth’ where it placed the responsibility for returning the economy on the path of recovery on the government.

“Plans to rebase GDP and CPI are of particular concern. Rebased unemployment numbers do not reflect the reality. The ongoing exercise to rebase GDP and CPI might, therefore, not yield the desired results,” the report said.

It stated that Nigeria’s GDP at $195 billion has declined over the last decade losing over $300 billion in value due to devaluation, low productivity and stagflation.

“To get the economy back on track, the government must reduce its debt burden, restore its credit rating to investment grade, and tame inflation,” the report said.

“This would reduce borrowing costs and provide a stimulus for investment, sustainable growth, productivity, and employment,” it said while stating that to accomplish this, FGN must restructure its capital structure and balance sheet.

Read also: Nigeria’s GDP rebasing: A facelift without depth?

“Selling down its JV oil assets will raise $30-50 billion, which can be applied to reduce the debt burden, improve the foreign exchange regime, provide dollar supply for naira appreciation, restore credit rating and boost net reserves.

“The country is no longer the largest Economy in Africa, ranking fourth behind South Africa, Egypt and Algeria. This owing to prolonged policy inconsistency since the economy came out of the post COVID recession,” it said.

CFG Advisory stated that 3.5 per cent GDP growth in 2024 is not sufficient to deliver value for the size of the Nigeria economy, stating that expectations of GDP growth should be between 8.5 percent 10 percent.

The report stated that Nigeria’s GDP grew in excess of 8.0 per cent in 2011 and 2014. “In both years, inflation was within a band of 11-13 per cent and interest rates 12-15 per cent.”

The CFG Advisory placed the responsibility for returning the economy on the path of recovery on the government, which it said should implement policies that would stabilise the exchange rate, lower interest rate and foster productivity.