Emefiele paints optimistic picture of Nigeria’s economy
…Says growth back to pre-pandemic levels
Godwin Emefiele, governor of the Central Bank of Nigeria on Friday night said growth has returned to pre-pandemic levels. This, he says is due to growth-enhancing measures of the bank.
Similarly, he has projected that gross domestic product (GDP) will grow at 3.10 percent for 2021 up from -1.8 percent in 2020.
Emefiele said this at the 56th annual bankers’ dinner, organised by the Chartered Institute Bankers of Nigeria (CIBN).
Nigeria’s GDP growth rate for 2019 stood at 2.3 percent, on the back of a relatively strong fourth-quarter GDP of 2.55 percent. This growth was accompanied by significant foreign capital inflows due to improved fundamentals of the economy.
“Real GDP growth rate is projected to remain robust and strengthen within the short-term. The output growth rate is projected to remain positive from 4.03 percent in the third quarter of 2021 to nearly 2.91 percent in the fourth quarter of 2021, implying a total growth of about 3.10 percent for 2021. The short-term projection indicates a continued strengthening,” he said.
On inflation, he said the headline inflation rate is expected to moderate to 15.35 percent, and 14.91 percent by December 2021 and February 2022, respectively.
Core inflation is equally forecast to slow from 13.74 percent in October 2021 to 13.39 percent in December 2021 and further to 12.68 percent by February 2022.
Food inflation is expected to slow from 19.57 percent to 17.26 percent and 16.58 percent over the same period.
Domestic disinflation, he added is projected on the backdrop of the favourable impact of the various CBN interventions on the real sector and the gradual upscale of economic activity, which is expected to keep prices moderate in the near term.
“Inflation is expected to continue on its downward trajectory into 2022 as continued interventions along with the onset of the harvest season aid improved supply of food items, which would further help to decelerate inflationary pressures,” he said.
He said the overall business confidence index is projected to rise significantly from -9.2 index points at end of August to over 37.7 index points in November 2021 and surpass 57.6 index points by mid-2022.
On foreign exchange (FX) reserves, he said based on in-house analysis and simulations, external reserves could surpass US$42 billion by mid-2022 from the US$41.5 billion in third-quarter 2021, based on the dynamics of oil price and FX demand for import.
Generally, external reserves are expected to be relatively comfortable levels with expectations of the sustained trend of current crude oil price, the impact of Eurobond Issuance, and stable exchange rate conditions.
In less than four weeks since its launch, almost 600,000 downloads of the e-naira application have taken place, Godwin Emefiele, CBN
He said efforts are ongoing to encourage faster adoption of the e-naira by Nigerians who do not have smartphones.
He stressed that the support of the financial industry will be critical in the ongoing deployment of the e-naira and efforts are ongoing to encourage continued partnership between the CBN and stakeholders in the financial industry.
Emefiele said as a result of the demand management policy, the naira has remained largely stable around N411/US$1 at the I&E window particularly since the discontinuation of FX allocation to Bureau De Change operators along with the convergence between the CBN and NAFEX rates.
Banks are able to meet the demands of their customers seeking forex for SMEs, school fees, medical and PTAs, which has reduced the need of customers to rely on alternative providers of foreign exchange. The average daily Fx turnover at the I&E window is now over $250million, up from $40million in April 2020.
“I would like to state that notwithstanding these positive indicators, our economic growth remains fragile, as our unemployment and inflation rate remains at levels that are not very supportive of growth,” he said.