The Lagos Chamber of Commerce and Industry (LCCI), has expressed worries over the state of the nation’s economy, asking policymakers to urgently consider reflating the economy by harmonizing the monetary and fiscal policies in order to confront the headwinds as the pandemic rages on.
According to the second quarter GDP figures released on Monday, by the NBS, the economy shrank by six percent, putting an end to the 3-year positive real growth rates recorded since the 2016/17 debilitating recession in Africa’s largest economy.
The New Diplomat reports that another negative figure in the next quarter of the year will officially confirm the plunging of the country’s economy into another recession.
Director-General of LCCI, Mr. Muda Yusuf while reacting to the decline in the nation’s national output, in a statement he released on Monday said: “It is imperative to ensure effective synchronisation of fiscal and monetary policies and proper implementation of the sustainability plan among other measures.”
The LCCI DG urged policymakers to also tackle the twin challenge of rising inflation and unemployment rate to reflate the economy.
“The Nigerian economy is currently in dire straits with inflation and unemployment at record high of 12.82 per cent and 27.1 per cent respectively.
“Given the protraction of the COVID-19 pandemic and lack of a vaccine, there is high possibility that the economy would contract, though marginally, in the third quarter.
Continuing, he said: “We note that the fiscal and monetary authorities have implemented several policies to mitigate the adverse impact of the COVID-19 shock on the economy and business environment.
“Noteworthy is the Nigerian Economic Sustainability Plan, which proposes a N2.3 trillion stimulus package, equivalent to 1.5% of GDP. We acknowledge the commitment of government to support the economy and protect businesses.”
Yusuf also said the 6.1 percent contraction is not a surprise as the number reflects the profound impact of the COVID-19 pandemic on the Nigerian economy.
The containment measures including lockdown, national curfews, inter-state travel bans, closure of schools, airlines, businesses imposed globally and domestically to slow the spread of the pandemic, according to him, significantly disrupted global supply chains and destabilised commercial, business, investment, and trade activities.
He added that it was also in the second quarter that the country was confronted with weakening oil prices, low crude production, a huge volume of unsold crude cargoes, foreign exchange scarcity, depleting external reserves, portfolio outflows in the financial markets, disruption, and adjustment of the 2020 budget, revenue collapse from oil and non-oil sources, rising spate of job losses, high food prices, among others.
“This would mark the second recession under the watch of the current administration.
“The structural bottlenecks to productivity in the economy needs to be urgently removed through a mix of fiscal, monetary and regulatory measures.
“It is imperative to reduce policy uncertainties in order to inspire the confidence of investors, both domestic and foreign.
“This would give the economy a boost in the near term,” he said.
However, he said, growth will continue to remain weak and fragile till the first quarter of 2021.
