Nigeria Economy may slip back into recession – Central Bank

Godwin Emefiele, Governor of Central Bank of Nigeria

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria has warned that Nigeria may head for another economic recession due to weak economic fundamentals currently visible in the economy.

Addressing reporters shortly after the two-day meeting of the MPC members held at the headquarters of the apex bank, the Central Bank of Nigeria (CBN) Governor Godwin Emefiele, said the economy had started showing signs of weakness.

Africa’s most populous nation’s economy exited recession in 2017 after suffering contraction for five consecutive quarters.

However, the CBN governor reiterated that the committee was concerned that there was a fresh threat of recession as the economy recorded growth rate of 1.95 percent and 1.5 percent during the first and the second quarters of this year, respectively.

According to him, the slowdown emanated from the oil sector, with strong linkages to employment and growth.

The apex bank boss noted that the late implementation of the 2018 budget, weakening demand and consumer spending, rising contractor debts, and low minimum wage were some of the risks to output growth.

Others he said include, the impact of flooding on agricultural output, continued security challenges in the North-East and North-Central zones, and growing level of sovereign debts.

“The MPC observed that despite the under-performance of key monetary aggregates, headline inflation inched up to 11.23 percent in August 2018 from 11.14 percent in July 2018,” he added.

On what could be done to stimulate economic activities, the CBN governor said that though growth remained weak, the effective implementation of the 2018 Federal Government budget and policies that would encourage credit delivery to the real sector of the economy might boost aggregate demand, stimulate economic activity and reduce unemployment in the country.

Source: CNBC Africa