CPPE Boss Predicts Economic Rebound After Current Shock
An economic expert, Muda Yusuf of the Centre For the Promotion of Private Enterprise (CPPE) has hinted at a possible rebound of the economy in the medium to long term as current distortions in the economy are corrected.
The expert attributed the slow growth of the economy to shocks from current economic reforms which have impacted energy prices and the naira exchange rate.
Yusuf said, “The adverse impacts of the reforms were disproportionately higher than expected. However, a rebound of the economy is expected in the medium to long term as current distortions in the economy are corrected.
The Tinubu administration on assumption of office has introduced some reforms including the unification of the exchange rates windows and the withdrawal of the age-long oil subsidy that impacted the economy. The immediate impact saw the fuel price jump by 300 per cent and the Naira crash to as low as N900 against the dollar.
The outcome of this is a price hike on all items including food, and transportation that affect the daily activities of the masses.
However, the CPPE Boss added that the marked improvement in the fiscal space of governments at all levels is an immediate positive of the reforms.
The immediate past Director General of the Lagos Chamber of Commerce and Industry (LCCI) noted the dominance of the non-oil sector which contributed 94.7% to GDP while the oil sector contributed 5.3 per cent was underscored by the second quarter GDP report, adding that the service sector continued to maintain its dominant role in the economy with a contribution of 58.4 per cent of GDP.
He stated that The structure of the economy continued to reflect its vulnerabilities, especially the challenges of productivity and competitiveness of the real economy.
In his comment on the second quarter report, Yusuf said, “The Q2 GDP growth fell short of the sub-Sahara projected average of 3.1 per cent for 2023; but better than projections for the Euro Zone of 1 per cent and the United States of 1.8 per cent”.
He stressed that certain sectors like Quarry and Minerals recorded better growth performance in the second quarter than in the first quarter.
According to him, the sector grew by a staggering 39.2 per cent, financial institutions 29.2 per cent, Rail Transport, 16.9 per cent; Insurance, 7.3 per cent; Trade, 2.4 per cent; Construction, 3.5 per cent; Manufacturing 2.2 per cent; Education, 1.4 per cent; Real Estate, 1.9 per cent; Chemical and Pharmaceutical, 6.4 per cent; Food and Beverage Sector, 4.3 per cent; Cement 3.3 per cent; Plastics, 2.7 per cent; Iron and Steel, 2.3 per cent; Agriculture 1.5 per cent; Fishing, 0.29 per cent.
ICT, Air Transport, and crop production sectors recorded positive but lower growth than in the previous quarter. For instance, ICT was 9.7 per cent; Air Transport 4.3 per cent; Crop Production, 1.8 per cent; Wood and Wood products 2.4 per cent; Paper and Publishing 1.4 per cent; and Water Transport, 5.4 per cent.
In the first two quarters of 2023, Oil refining, Livestock, Crude Petroleum and Gas, stumbled because of macroeconomic, structural or policy issues with oil refining contracted by 35.6 per cent; Livestock by 2.3 per cent; Crude Petroleum and Gas by 13.4 per cent; Textile, 4.4 per cent, stating that “Growth in these sectors continued to be subdued by heightened inflationary pressures, exchange rate volatility, spiking energy cost, insecurity and the political economy of the oil and gas sector,” he said
He said the sector as Road transport sector contracted because of the prevailing economic and investment climate conditions. Other sectors that contracted include Coal Mining which contracted by 15.7 per cent; Motor Vehicle Assembly, 3.9 per cent; Music and Motion Pictures, 2 per cent.
Yusuf said that the Nigerian economy is still going through corrective reforms to remove some fundamental distortions and restore the economy back to the path of recovery and growth.
“Implementing the reforms is an arduous task. The trade-offs are profound and the social impact has been devastating. Given the inevitability of the reforms, implementation calls for a delicate balancing act and strategic sequencing to ensure an inclusive economic transition”, he held.
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