Nigeria Will Exit Recession by Year End, Says CBN Gov, Emefiele

Nigeria Will Exit Recession by Year End, Says CBN Gov, Emefiele

Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, this weekend in Enugu expressed optimism that barring further shocks, Nigeria will exit the current economic recession by the end of this year.

Emefiele said with sustained efforts by not just the CBN but also other monetary and fiscal authorities in the country, the nation's economy would bounce back before long.

In  keynote address entitled: ‘The Dilemma of Monetary Policy and Exchange Rate Management in a Recession: Potential Options for Nigeria’, which he delivered at the 2nd Homecoming of the Department of Economics, Faculty of Social Sciences, University of Nigeria Nsukka (UNN), Enugu State, the CBN governor urged Nigerians to keep hopes alive as the growth indicators were becoming encouraging.

“The growth indicators are there for us to see. In January 2017, inflation was 18.8, now inflation is down to 16.24. By fourth quarter of 2016, growth was negative 1.72 per cent, first quarter of 2017, growth had improved to negative 1.52 per cent which means we've seen an improvement in growth by 1.2 per cent, if we see another 1.2 per cent growth in second quarter, we are out of recession,” he said.

Going down memory lane on how Nigeria found itself on the current economic downturn, Emefiele said the current economic crisis had its roots in the external sector, following the continued slide in crude oil prices since the second half of 2014 as it impacted the country's foreign exchange receipts and fiscal position thereby undermining the funding of the foreign exchange market.

He also disclosed that the economic recession could further be traced to a long standing culture of under-investment in domestic productive capacity, lending itself to decayed infrastructure, worsening conditions for doing business in the country and the challenge of persuading the deposit money banks to channel credit to the real economy.

According to him, in view of the global shocks, the nation officially slipped into full blown recession after the second quarter of 2016 when the Gross Domestic Product (GDP) dipped by -2.06 per cent.

"The growth rate declined by 1.70 percentage points compared with the contraction of 0.36 per cent recorded in preceding quarter and lowered by 4.41 percentage points compared with the growth rate of 2.35 per cent recorded in the corresponding quarter of 2015," the CBN governor said.

He said the fluctuations in the exchange rate (depreciation/appreciation) equally had great consequences on output, inflation and other components of aggregate demand, which directly impact the welfare of the ordinary man in a consumption and imports-dependent economy like Nigeria’s.

Emefiele who received the award of national development as a distinguished alumnus of the department said while efforts are being made by the CBN and other bodies to get the country's economy out of brat he woods, there are some policy options that could further quicken the process.

According to him, government needs to spend more money in rebuilding infrastructure, explore more opportunities for Private Public Partnerships (PPP), pursue growth-enhancing fiscal policies and jumpstart agriculture and agribusiness.

Others are: exploration of opportunities for more revenue, pursuit of non-oil exports, introduction of import reducing policies, curbing inflation which stands at over 16 per cent presently among others.

He said the nation's propensity to import had also had damaging effects on the country's economy, noting that the CBN "believes that it is high time we started looking inwards and stopped supporting the importation of items that we can produce locally using Nigeria's hard-earned foreign exchange."