Connect with us

Economy

Nigeria’s Key Economic Indicators Following Devaluation

Published

on

Lagos Nigeria - Investors King

Following the Central Bank of Nigeria’s decision to devalue the Nigerian Naira, Investors King has decided to assess Nigeria’s key economic indicators and their impacts on economic productivity and stakeholders at large.

Consumer Prices, which measures the inflation rate, moderated to 18.12 percent in the month of April from 18.17 percent in March 2021 despite the ongoing herders and farmers crisis.

At the monetary policy committee meeting held on Monday 24th and Tuesday 25th May 2021, the committee attributed the slight improvement to a series of adjustments made by the central bank, even when consumer prices continue to jump in reality.

A bag of pure water/sachet water has risen by N40 from N140 to N180 in Ibadan while prices of other food items have gone up by almost 50 percent and more in some cases.

Still, the National Bureau of Statistics showed food inflation decline marginally in April to 22.72 percent, down from 22.95 percent in March.

Feyintola Bolaji, a merchant in Ibadan, Oyo State, said rising prices has eaten deep into her sales as she had to cut down on the amount she now put on her own family’s table.

“It is really bad, I can’t simply afford to give my children what they really need in terms of food,” said Bolaji, a mother of three in her 50s based in the southwestern city of Ibadan. “I try to make them get the nutrients they need as growing children, but it is not enough,” she said, adding “I have had to cut down on meat and fish.”

Last week, the Central Bank of Nigeria (CBN) adopted the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) as the official rate following failure to sustain its managed lower exchange because of the dwindling foreign reserves and refusal of multilateral financial institutions to grant Nigeria any loan until an effort is made at converging the nation’s foreign exchange rates.

The move led to a N31 devaluation from N379/$1 to N410/$1. A decision widely criticised by experts given Nigeria’s economic reality post-COVID-19.

The nation’s manufacturers have blamed the intermittent devaluation of Naira and persistent dollar scarcity for the weak manufacturing sector. Nigeria’s Manufacturing Purchasing Managers’ Index stood at 49, suggesting that activity remains weak in the sector despite the 0.51 percent GDP growth rate recorded in the first quarter of the year.

Nigeria’s unemployment stood at 33.3 percent as new job creation plunge with new investments and capital importation. Experts have blamed the lack of a clear economic path, rising insecurities, low fiscal buffer and weak fundamentals for the drop in new investments and the new jobs needed to plug falling household income and consumer spending.

Still, the apex bank left the interest rate unchanged at 11.5 percent, citing the need to attain price stability. However, this is because Nigeria’s inflation is cost-push, ‘substantial rise in the cost of goods and services due to underlying factors like increase in electricity, import duty, high forex, etc.’ Meaning, an adjustment to the monetary policy rate will have little to zero impact on rising prices as long as the present economic conditions remain.

Therefore, Investors King expected a persistent increase in prices to further weigh on consumer spending, drag on economic productivity and force more companies to cut jobs.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Economy

Federal Government Set to Seal $3.8bn Brass Methanol Project Deal in May 2024

Published

on

Gas-Pipeline

The Federal Government of Nigeria is on the brink of achieving a significant milestone as it prepares to finalize the Gas Supply and Purchase Agreement (GSPA) for the $3.8 billion Brass Methanol Project.

The agreement to be signed in May 2024 marks a pivotal step in the country’s journey toward industrialization and self-sufficiency in methanol production.

The Brass Methanol Project, located in Bayelsa State, is a flagship industrial endeavor aimed at harnessing Nigeria’s abundant natural gas resources to produce methanol, a vital chemical used in various industrial processes.

With Nigeria currently reliant on imported methanol, this project holds immense promise for reducing dependency on foreign supplies and stimulating economic growth.

Upon completion, the Brass Methanol Project is expected to have a daily production capacity of 10,000 tonnes of methanol, positioning Nigeria as a major player in the global methanol market.

Furthermore, the project is projected to create up to 15,000 jobs during its construction phase, providing a significant boost to employment opportunities in the country.

The successful execution of the GSPA is essential to ensuring uninterrupted gas supply to the Brass Methanol Project.

Key stakeholders, including the Nigerian National Petroleum Company Limited and the Nigerian Content Development & Monitoring Board, are working closely to finalize the agreement and pave the way for the project’s advancement.

Speaking on the significance of the project, Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, emphasized President Bola Tinubu’s keen interest in expediting the Brass Methanol Project.

Ekpo reaffirmed the government’s commitment to facilitating the project’s success and harnessing its potential to attract foreign direct investment and drive economic development.

The Brass Methanol Project represents a major stride toward achieving Nigeria’s industrialization goals and unlocking the full potential of its natural resources.

As the country prepares to seal the deal in May 2024, anticipation grows for the transformative impact that this landmark project will have on Nigeria’s economy and industrial landscape.

Continue Reading

Economy

IMF Report: Nigeria’s Inflation to Dip to 26.3% in 2024, Growth Expected at 3.3%

Published

on

IMF global - Investors King

Nigeria’s economic outlook for 2024 appears cautiously optimistic with projections indicating a potential decrease in the country’s inflation rate alongside moderate economic growth.

The IMF’s revised Global Economic Outlook for 2024 highlights key forecasts for Nigeria’s economic landscape and gave insights into both inflationary trends and GDP expansion.

According to the IMF report, Nigeria’s inflation rate is projected to decline to 26.3% by the end of 2024.

This projection aligns with expectations of a gradual easing of inflationary pressures within the country, although challenges such as fuel subsidy removal and exchange rate fluctuations continue to pose significant hurdles to price stability.

In tandem with the inflation forecast, the IMF also predicts a modest economic growth rate of 3.3% for Nigeria in 2024.

This growth projection reflects a cautious optimism regarding the country’s economic recovery and resilience in the face of various internal and external challenges.

Despite the ongoing efforts to stabilize the foreign exchange market and address macroeconomic imbalances, the IMF underscores the need for continued policy reforms and prudent fiscal management to sustain growth momentum.

The IMF report provides valuable insights into Nigeria’s economic trajectory, offering policymakers, investors, and stakeholders a comprehensive understanding of the country’s macroeconomic dynamics.

While the projected decline in inflation and modest growth outlook offer reasons for cautious optimism, it remains essential for Nigerian authorities to remain vigilant and proactive in addressing underlying structural vulnerabilities and promoting inclusive economic development.

As the country navigates through a challenging economic landscape, concerted efforts towards policy coordination, investment promotion, and structural reforms will be crucial in unlocking Nigeria’s full growth potential and fostering long-term prosperity.

Continue Reading

Economy

South Africa’s March Inflation Hits Two-Month Low Amid Economic Uncertainty

Published

on

South Africa's economy - Investors King

South Africa’s inflation rate declined to a two-month low, according to data released by Statistics South Africa.

Consumer prices rose by 5.3% year-on-year, down from 5.6% in February. While this decline may initially suggest a positive trend, analysts caution against premature optimism due to various economic factors at play.

The weakening of the South African rand against the dollar, coupled with drought conditions affecting staple crops like white corn and geopolitical tensions in the Middle East leading to rising oil prices, poses significant challenges.

These factors are expected to keep inflation relatively high and stubborn in the coming months, making policymakers hesitant to adjust borrowing costs.

Lesetja Kganyago, Governor of the South African Reserve Bank, reiterated the bank’s cautious stance on inflation pressures.

Despite the recent easing, inflation has consistently remained above the midpoint of the central bank’s target range of 3-6% since May 2021. Consequently, the bank has maintained the benchmark interest rate at 8.25% for nearly a year, aiming to anchor inflation expectations.

While some traders speculate on potential interest rate hikes, forward-rate agreements indicate a low likelihood of such a move at the upcoming monetary policy committee meeting.

The yield on 10-year bonds also saw a marginal decline following the release of the inflation data.

March’s inflation decline was mainly attributed to lower prices in miscellaneous goods and services, education, health, and housing and utilities.

However, core inflation, which excludes volatile food and energy costs, remained relatively steady at 4.9%.

Overall, South Africa’s inflation trajectory underscores the delicate balance between economic recovery and inflation containment amid ongoing global uncertainties.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending