How Nigeria 'll Exit Recession In First Quarter 2021 -Emefiele

Governor of Central Bank, Mr Godwin Emefiele, has projected that Nigeria will expectedly exit recession by the first quarter of 2021.

The governor of the apex bank also predicted a GDP growth of 2.0 percent in 2021. Emefiele who spoke at the 55th Annual Bankers Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos said the recession was occasioned by a number of factors including the COVI-19 pandemic and other dynamics. Nigeria will exit recession

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At the event, the CBN governor gave an insight into the actions of the apex regulatory body under the current fiscal year and projected what to hope for in the coming new year.

Emefiele argued that arising from the impact of COVID-19 on key economic variables such as crude oil, the fiscal and monetary issues, the federal government has defined actionable and pragmatic measures to prevent long-term damage to the overall growth prospects of the Nigerian economy.

He said that the impact of these measures along with the removal of restrictions on human and logistical movements coupled with the resumption of international travels, would naturally advance improvement in key indicators of the economy, as several economic activities returned to growth normalcy.

He added: “A sectoral assessment of economic activities in the third quarter indicates that the economy witnessed positive growth in key sectors such as Information and Communications Technology, Agriculture, Health, Construction, Finance and Insurance and Public Administration.

“With sustained implementation of our intervention measures, we do expect that the Nigerian economy could emerge from the recession by the first quarter of 2021, due to high frequency data that indicates continued improvements in the non-oil sector of our economy.

“We also expect that growth in 2021 would attain 2.0 percent.”

The CBN boss further noted that the agricultural sector has consistently continued to record impressive growth aided by productivity gains in the sector as well as multiple interventions from the government.

According to the apex bank governor, the Manufacturing Purchasing Managers Index in November which stood at 50.2 points, shows an expansion in manufacturing activities after six months of contraction.

Emefiele contended that a total of 18 sectors recorded positive growth in the third quarter relative to 13 sectors in the second quarter, which is a significant improvement in economic activity and sustainable commercial growth.

Recall that about 36 out of the 46 economic activities tracked by NBS, had reflected positive improvements in growth, which included activities that recorded negative growth previously, a development which Emefiele said is remarkable and commendable.

Emefiele further revealed that $150million dollars was being traded daily as a result of Monetary and Fiscal Authority measures that have been put in place by CBN to sanitize and restore operational activities at the foreign exchange market.

Emefiele said that the Nigerian Stock Exchange All Share index rose by 65 percent between April and November 2020, reflecting improved sentiments by investors on the fundamentals of publicly listed companies.

As a result of these measures, Emefiele argued that the GDP growth in the third quarter, improved to -3.6 percent from -6.1 percent in quarter two, despite the fact that the economy still fell back into a recession.

He said downside risks remain in service related sectors as restoration of full economic activities looms , despite COVID vaccine being produced and made available to millions of people across the world.

The CBN governor also disclosed that with significant surge in COVID-19 cases in some advanced economies across the world with consequent imposition of restrictions and all other forms of COVID-19 protocols especially in parts of Europe, Nigerians should realize that this would naturally be a subject of concern with possible impact on teh country’s economy.

Emefiele said that “it was important that the economy be protected from the impact of these shocks through diversification efforts, with work also being done to ensure adherence to safety protocols in order to prevent a surge in COVID-19 related cases, as this could further cripple economic activities.”

The governor added that “the bank’s actions in 2021 would be guided by the considerations that emerged from the Monetary Policy Committee meeting of Nov. 23 and Nov. 24, which sought to address the major headwinds exerting downward pressure on output growth and upward pressure on domestic prices.”

According to Emefiele, a more useful , pragmatic and realistic policy would be the supply-side measures implemented by the bank.

Consequently, the apex bank governor said that emphasis would henceforth be focused on strengthening the development finance initiatives of the apex bank to enable the institution stimulate greater production and reduce unemployment in the country.

He said: ”We intend to increase our support for measures that will aid improved cultivation of local produce in Nigeria, with particularly emphasis on improving our yield levels, as food inflation continues to remain the key driver of inflationary trends”.

The CBN governor maintained that for the sector to play significant role as a facilitator of growth in the agriculture sector, through its intermediation function it is vital to strengthen its finance initiatives.

He identified major opportunities in the agriculture sector that banks should explore to address some of the existing gaps in the agriculture value chains, such as storage centers, transport logistics, and technology platforms.

The governor also noted that Information Communication Technology was another sector which has emerged as a significant source of resilience in mitigating the impact of COVID-19 on the economy.

He explained that in the third quarter of 2020, the ICT sector made contributions of over 17.8 percent to GDP growth, 47 percent higher than its contributions a year earlier.

Emefiele urged the banking sector to also consider Infrastructure Finance as another critical area for stable growth of the economy.

According to him, with the decline in revenues due to federal and state government as a result of the drop in crude oil prices, alternative ways of funding infrastructure are critical if we are to generate sustained growth of the economy.

He said that these products would help to improve productivity of farmers, reduce post-harvest losses, increase access to finance for farmers and improve sourcing of local raw materials for processing by manufacturing and industrial firms.

Emefiele said that it would aid improved production of local goods, enable the creation of jobs, while supporting the growth of other sectors of the economy such as manufacturing, and transportation.

*NB: With additional data from NAN

How Nigeria ‘ll Exit Recession In First Quarter 2021 –Emefiele