The Central Bank of Nigeria has said it sees the country’s inflation rate dropping to single digit next year, with the full implementation of its recent policies designed to boost different sectors of the economy.
The Director of Monetary Policy Department, CBN, Dr Hassan Mahmud, said this on Friday at the virtual mid-year economic review and outlook 2021, which was organised by the Chartered Institute of Bankers of Nigeria’s Centre for Financial Studies and B. Adedipe Associates.
The country’s inflation rate fell slightly from 17.93 per cent in May to 17.75 per cent in June, according to the National Bureau of Statistics.
Mahmud said since the economy recovered from recession in the last quarter of 2020, it had maintained a path of recovery despite certain challenges triggered by the COVID-19 pandemic and insecurity.
He said despite challenges such as insecurity, exchange rate market pressure, declining capital inflows, high debt service payments and rising fiscal deficits, the apex bank projected speedy domestic recovery.
According to him, if certain things were in place, the country would experience some positive projections in 2021 and the beginning of 2022.
Mahmud said, “Also, if the CBN forecasts for GDP growth are sustained and there is improved vaccination and the health hazards and lockdowns are not resurfacing, we will see GDP getting close to three per cent by the end of 2021.
“We will also see the inflation number coming down less than 13 per cent by the end of the year and further down to the NBS projection of single digit by 2022 or the middle of 2022.
“We will start seeing a downward trend in inflation numbers, particularly, headline inflation.”
According to Mahmud, there will be a drop in food inflation, if an effective supply system is maintained and security issues mitigated.
The Chief Consultant of BAA Consult, Dr Biodun Adedipe, who also spoke at the event, said if the oil sector became positive in the areas of prices and production volume and export volume, this would add to economic growth.
He said, “At BAA, our projections for Nigeria economic growth for 2021 had remained 2.54 per cent since February and we have maintained it so.
“If the prognosis, the oil sector in Nigeria is positive in terms of price, production volume and export volume, that goes a long way in driving growth and changing some of what we see as headwinds and risks.”
In his opening remarks, CIBN President, Dr Bayo Olugbemi, highlighted some of the key challenges hampering economic recovery.
He said, “Currently, the Nigerian economy contends with myriads of issues which seem to be threatening normal business operations and general livelihood. For example, we continue to grapple with the effects of the COVID-19 pandemic and more specifically, the third wave of the virus, which threatens to undermine the modest economic growth achieved within the year.
“The nation also contends with persistent macroeconomic issues such as double-digit inflation currently put at 17.75 per cent, which erodes purchasing power and the value of savings; high unemployment rate as well as security issues such as rampant kidnappings and hostilities inflicted by terrorist groups, bandits, and criminal elements in the society.”
Olugbemi emphasised the need for proper guidance to help individuals and businesses make the right decisions to overcome existing challenges.
“As these issues continue to plague the normal conduct of economic activities, it goes without saying that there is a strong need for further guidance to help individuals and businesses make informed and strategic decisions that will help them weather the storm,” he added.