The Nigeria economy has remained on a positive growth path for four consecutive quarters after the recession in the 3rd quarter of 2020. 41 out of the 46 sectors assessed in the 3rd quarter by NBS, recorded positive growth, as growth was driven by significant improvements in the non-oil sector, particularly, Agriculture Manufacturing, Trade, ICT, Construction, Finance and Transportation.
Godwin Emefiele, Governor, Central Bank of Nigeria (CBN) on November26, 2021 said we witnessed robust economic recovery as GDP growth stood at 4.03% in the 3rd quarter of 2021, following the 5.01% growth recorded in the 2nd Quarter of 2021
Emefiele stated this in his keynote address at the 56th Chartered Institute of Bankers (CIBN) annual dinner held in Lagos
He said the economy has remained on a positive growth path for four consecutive quarters after the recession in the 3rd quarter of 2020. 41 out of the 46 sectors assessed in the 3rd quarter by NBS, recorded positive growth, as growth was driven by significant improvements in the non-oil sector, particularly, Agriculture Manufacturing, Trade, ICT, Construction, Finance and Transportation. We have also witnessed a gradual recovery in manufacturing output growth as the Manufacturing PMI index rose to 47.3 points in October 2021 from 44.9 in January 2021, he added.
According to CBN governor our interventions particularly in the manufacturing and the agriculture sectors significantly helped to encourage continuous improvements in growth in these two key sectors of our economy.
Today, he said our food production systems have become more sustainable due to the improved output at our farms and local factories.
“Output of staple commodities such as rice, maize, palm oil and tomatoes have grown significantly, and we have also seen increased efforts of our local manufacturing firms to engage in backward integration efforts.
“Second, a visit to any major retail chain will reveal an increasing number of high qualities made in Nigeria products relative to imported goods, which is helping to increase domestic production, generate employment and wealth in our country. If these intervention efforts were not carried out by the monetary and fiscal authorities, our economy would have been in a grim state, he added.
“Inflation has continued to moderate for seven consecutive months, as it declined from 18.17 percent in March 2021 to 15.9 percent in October 2021 supported by improved output of staple food items. Inflation however still remains above our benchmark, which means efforts must continue to be made to slow down the pace of the rise in prices.”
Emefiele disclosed that supported by our demand management policy, in addition to support from the successful issuance of the $4bn Eurobond and the IMF SDR, our external reserves today stands at over $41.4bn which is enough to support 9 months of imports. He stressed that this is not just a morale booster for both foreign direct and portfolio investors willing to invest in the economy, but it provides significant fire power to support our domestic industries that need to import critical machines and equipment for domestic production and exports
He affirmed that as a result of our demand management policy, the naira has remained largely stable around N411/US$1 at the I&E window particularly since the discontinuation of FX allocation to Bureau De Change operators along with the convergence between the CBN and NAFEX rates. He further stated that banks are now able to meet the demands of their customers seeking forex for SMEs, school fees, medical and PTAs, which has reduced the need of customers to rely on alternative providers of foreign exchange. Average daily Fx turnover at the I&E window is now over $250million, up from $40million in April 2020.Our current account deficit has narrowed significantly, from a huge deficit of 4.53% of GDP in the 4th quarter of 2020 to negative 0.44% of GDP in the 2nd quarter of 2021 due to a surplus position in the goods account, he revealed.
In his words: The surplus position in the goods account is due to a reduction in imports, increase in crude oil and gas export receipts, and improvement in remittance inflows. Remittance inflows have been supported by our naira for dollar program, and we have seen a surge in remittance inflows from over $5m per week in June 2020 to over $100m per week in October 2021, he noted.
He disclosed that the CBN’s in-house model, after an exhaustive simulation with various oil price possibilities and numerous scenarios of other macroeconomic metrics, indicate a continued and strong rebound of the domestic economy. Near-term outlook of the Nigerian economy is brightening significantly, with improvements projected into the short- and the medium-term, he added.
According to him, GDP: Real GDP growth rate is projected to remain robust and strengthen within the short-term adding that the output growth rate is projected to remain positive from 4.03 percent in 2021q3 to nearly 2.91 percent in 2021q4, implying a total growth of about 3.10 percent for 2021. Short-term projection indicates a continued strengthening of the growth rate, he said.
CBN governor pointed out that deliberate structural policies and reforms are needed to raise these projected trends higher towards the desired 5 percent average growth level. He stressed further that output growth rate for the Nigerian economy is broadly estimated by key institutions to consolidate in 2021.
“The IMF and the World Bank project real growth rates of 2.6 percent and 2.4 percent, respectively while the estimate by the Federal Ministry of Finance and National planning stands at 3.0 percent adding that generally, real GDP growth rate is projected to remain robust and strengthen within the short-term, regardless of the immanent vulnerabilities.
“With this continued strengthening, real GDP could recover beyond the pre-pandemic levels by the first quarter of 2022. Further simulations of the medium-term projections suggest that Nigeria’s real GDP could surpass pre-COVID trends by 2024, he concluded.