The Monetary Policy Committee of the Central Bank of Nigeria last Tuesday warned that the country’s economy could slip into recession next year “if proactive steps were not taken by the federal government to revive key sectors”.
Ordinarily, people reading that statement, and believing it, would be excused for thinking that the CBN and Governor Godwin Emefiele don’t already know some truths which render their statement more political and self-serving than economic. Unfortunately, the CBN and the Monetary Policy Committee already know that a recession in 2016 is inevitable, Vanguard reported.
The call for “proactive steps”, meaning vital fiscal policy, betrays the failure to level with Nigerians and the international community–the latter has a vital interest in the country’s economy and its confidence in Nigeria is crucial to the recovery from impending recession.
The CBN knows better than anybody else that, as China goes, so goes much of the global economies. A most recent survey showed that Chinese factory output had fallen to its lowest level in six and a half years. Big economies on the skid cannot be turned around in a hurry.
The same CBN is aware that exports of crude are expected to fall to 56.66 million barrels in November. That is 1.89 million per day instead of the 2.04 million planned. December shipments are not expected to be significantly higher.
What sort of “proactive steps” can be taken between now and December to avert a total year decline from last year? Economics is not magic.
The CBN and keen watchers of the economy are aware that the National Bureau of Statistics announced that our gross domestic product grew by 2.35% in the second quarter of this year–which ended in June. It was the second quarter in a row that the economy will record less than budgeted performance. Incidentally, 2.35% growth, when the population continues to grow at close to 2.85%, means that the average Nigerian is getting poorer.
Furthermore, the NBS projects that year-end GDP growth will be about 2.63%. That is still less than half of the budgeted growth. Additionally, the third quarter is over and there was no economic stimulus to accelerate the rate of GDP growth from the abysmal 2.35% recorded in the second quarter.
