…. Says Nigeria Will Be Out Of Recession in October
- CBN Retains MPC Rate At 14%; Liquidity Ratio At 30%
- Non-Oil GDP Grows By 0.72% – NBS
In spite of the Gross Domestic Product (GDP) contracting by 0.52 per cent in first quarter of 2017, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has said the economy is on the part of recovery after plunging into recession officially in 2016, The New Diplomat has gathered.
Emiefele said the country would exit the biting economic recession sooner rather than later, stating that decelerating inflation and negative gross domestic product (GDP) growth, as well as increased capacity utilisation and agriculture output were all signs that the economy was on the path to recovery.
His comment came on the back of the first quarter of the year (Q1 2017) GDP report released by the National Bureau of Statistics Tuesday, showing that Nigeria’s GDP contracted by 0.52 per cent (year-on-year) in real terms, indicating five consecutive quarters of contractions since the first quarter of 2016.
According to NBS, This was 0.15 per cent higher than the rate recorded in the corresponding quarter of 2016 (revised to –0.67 per cent from –0.36 per cent) and higher by 1.21 percentage points from the rate recorded in the preceding quarter (revised to –1.73 per cent from –1.30 per cent).
Also, the non-oil GDP grew by 0.72 per cent to record the best performance in four quarters, when compared to -0.33 per cent in Q4 2016 and -0.18 per cent in Q1 2016, as NBS attributed the sector’s growth to activities in the Agriculture Sector (Crop Production), Information and Communication, Manufacturing, Transportation and Other Services.
Emefiele, who spoke at the end of the Monetary Policy Committee (MPC) meeting of the central bank, reaffirmed his earlier projection that the nation’s economy would exit the recession in the third quarter of the year, predicating his optimism on emerging macroeconomic variables.
On the outcome of the meeting of the MPC, the CBN governor said the committee voted unanimously to retain the Monetary Policy Rate (MPR) at 14 per cent alongside all other policy parameters.
Accordingly, the MPC retained the cash reserve ratio (CRR) at 22.5 per cent, liquidity ratio at 30 per cent, and the asymmetric corridor at +200 and -500 basis points around the MPR.
“My view is that with all the positive signs we see: inflation tending downwards, GDP improving to the extent that negative movement has decelerated greatly and we have seen foreign exchange going to the real sector and industrial capacity is beginning to improve, we’ve seen positive signs in various economic sectors.
“So I am very confident that at the end of the third quarter, we will be out of the recession,” Emefiele declared.
He also stated that the central bank cannot determine what the convergence point of the various forex rates would be, adding, however, that based on the indicators, the rates were already converging.
Emefiele recalled that about three months ago, the local currency was trading at above N500 to the dollar on the parallel market, but has appreciated to between N370 and N375/$.
Describing this as a significant achievement vis-à-vis the convergence, Emefiele noted that the monetary authorities would however prefer a convergence that would head southwards rather than northwards.
“We would prefer a convergence that will significantly head southwards, than a convergence that will go northwards. The fact that we have seen a convergence in the southward direction gives us a lot of hope that things are working in the right direction,” he said.
