By CBN Warns Nation of Relapse Into Another Recession
Amosu Jeremiah
The Central Bank of Nigeria (CBN) has confirmed that the nation risks a relapse into recession. This was revealed by the CBN Governor, Godwin Emefiele yesterday at the end of the Monetary Policy Committee (MPC) meeting in Abuja.
This worry by the MPC was expressed as a result of the economy slowing to 1.95 per cent and 1.50 per cent within the first two consecutive quarters in 2018.
The CBN Governor while appraising the microeconomic environment also raised serious concerns on the plummeting of the positive data hitherto achieved.
“In particular, relative stability returned to the foreign exchange market, going by a robust level of external reserves with inflation trending downward for the 18th consecutive months.
These gains so far achieved appear to be under threat of reversal following the new data which provides evidence of weakening fundamental” he revealed.
Emefiele further revealed to newsmen the reason for this negative signs which he greatly acknowledge to inflation, pressure on the external reserves among other factors. The CBN boss also noted that the oil sector also contributes to the sudden slowdown.
“Rising inflation and pressure on the external reserves created by the capital flow reversal as the current challenge grow. The slowdown emanates from the oil sector with strong linkages to employment and growth in the key sectors of the economy ” he further revealed.
The committee also raised concern over the rising level of non-performing loans in the banking system which is linked to the oil sector and advised the bank to closely monitor and address the situation.
According to the committee, government needs to take advantage of the current rising trend in the oil prices to rebuild fiscal buffers, strengthen government finances in the medium term and reverse the current trend of decline in output growth.
In similar vein, the potential Impact of liquidity injection from election related spending and increase in Federation Accounts Allocation Committee (FAAC) distribution which is rising in tandem with increase in oil receipt was also pointed as major threats by the CBN Governor.
One would recall that the CBN raised a similar alarm in 2015 and 2016 of an impending recession if certain indications were not taking care of. The economy relapsed into recession briefly after from the end of 2016 through 2017.
