Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, on Friday predicted a 2% growth in the country’s Gross Domestic Product (GDP) by 2021.
Emefiele, who spoke at the 55th Annual Bankers Dinner, organised by the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, anticipated that with sustained implementation of the central bank’s development finance initiatives, as well as efforts from the fiscal authorities, the Nigerian economy could emerge from recession by the first quarter of 2021.
Nigeria’s real GDP contracted for the second consecutive quarter by 3.62% in the third quarter of the year, compared to a growth of -6.1%, which showed that the country had entered its second economic recession in five years.
But Emefiele assured his audience who were mostly bankers and investors that just like policymakers did in 2016 when the economy slipped into recession, the fiscal and monetary policy managers would join forces to address the present economic challenge.
He reiterated his call for analysts to always give out accurate figures and indicators on the economy so as not to cause panic or mislead potential investors.
He explained:
We also expect that growth in 2021 would attain 2%. However, downside risks remain, as restoration of full economic activities, particularly in service-related sectors, remains uncertain until a Covid19 vaccine is produced and made available to millions of people across the world.
Second, with the significant rise in cases in advanced markets and the imposition of lockdowns in parts of Europe, concerns remain on the impact this could have on growth in advanced economies, commodity prices and the financial markets.
We must therefore find ways to insulate our economy from the impact of these shocks through our diversification efforts, while also working to ensure that we adhere to safety protocols in order to prevent a surge in Covid-19 related cases, as this could further cripple economic activities.
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According to Emefiele, actions by the CBN in 2021 would be guided by considerations that emerged from the Monetary Policy Committee meeting held last week, which sought to address the major headwinds exerting downward pressure on output growth and upward pressure on domestic prices.
He noted that given the fact that the rise in inflation was not due to monetary factors but rather the prevalence of structural rigidities and supply shocks, traditional tools of monetary policy may not be helpful in addressing current inflationary pressures. Rather, he said a more useful policy would be the supply-side measures implemented by the Bank.
Owing to this, Emefiele said emphasis would be placed on strengthening the development finance initiatives of the CBN in order to stimulate greater production and reduce unemployment.