Godwin Emefiele, the governor of the Central Bank of Nigeria, has warned about the possibility of the country slipping into another recession soon.
He said this is as the Nigerian economy has started showing signs of weakness and slowing down.
Emefiele made the disclosure while speaking with journalists at the end of a two-day meeting of the Monetary Policy Committee in Abuja on Tuesday, September 25, 2018.
He said the committee is concerned as the economy only recorded growth rate of 1.95 percent and 1.5 percent during the first and the second quarters of this year, respectively, a situation he blamed on the oil sector.
Other factors identified by the CBN governor are the late implementation of the 2018 budget, rising contractor debts, low minimum wage, the impact of flooding on agricultural output, continued security challenges in the north-east and north-central zones, and growing level of sovereign debts.
“The MPC observed that despite the underperformance of key monetary aggregates, headline inflation inched up to 11.23 percent in August 2018 from 11.14 percent in July 2018,” Emefiele said.
“The near time upside risks to inflation remain the dissipation of the base effect expected from 2019 election related spending, continued herdsmen attacks on farmers and the episode of flooding, which destroyed farmlands and affected food supply ultimately.
“In this regard, the committee urges the fiscal authorities to sustain implementation of the 2018 budget to relieve the supply side growth constraints so that they can address the flooding, which has become perennial on a permanent basis.
“Relative stability has returned to the foreign exchange market buoyed by the robust external reserves, with inflation trending downward for the 18th consecutive month.
“The gains so far achieved appeared to be under threat following the new data, which provides evidence of weakening fundamentals. The committee identified a rise in inflation and pressure on the external reserves created by the capital flows reversals as the current challenges to growth.
“It noted that the underlying pressures have started rebuilding and capital flows reversals have intensified as shown by the bearish trend in the equities’ market even though the exchange rate remains very stable.
“The committee was concerned that the exit from recession may be under threat as the economy slid to 1.95 percent and 1.5 percent during the first and the second quarters of 2018, respectively.
“The committee noted that the slowdown emanated from the oil sector with strong linkages to employment and growth.”
The CBN governor, therefore, called for the effective implementation of the 2018 budget and policies that would encourage credit delivery to the real sector of the economy might and boost aggregate demand, stimulate economic activity and reduce unemployment in the country.
Recall that the Nigerian economy had exited recession in 2017.
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