Consumers’ Demand, FDIs To Remain Weak In 2020, Says LCCI
The Lagos Chamber of Commerce and Industry (LCCI) has projected a weak consumer demand and also low private sector investment in year 2020.
The Chamber position is predicated on the projection of the World Bank and the International Monetary Fund (IMF) that growth in the country will hover at 2.1 per cent and 2.5 per cent, and below the 3 per cent population growth rate which implies that per capita income would contract further, making more Nigerians poorer.
LCCI explained that it expects the country’s economic growth to remain subdued at around 2 per cent this year, adding that the country’s economy remains susceptible to external shocks most especially oil price fluctuations.
Director-General, Muda Yusuf LCCI also noted that the ongoing trade war between the United States of America and China will also have adverse impact on the Nigerian economy during this year.
Yusuf said, “Amidst continued global slow growth and trade wars, we expect growth to be slow albeit stable in 2020 in the face of the implementation of recent policy measures by the government. We note that the Nigerian economy remains susceptible to external shocks most especially oil price fluctuations.
Thus, we reiterate that government as a matter of urgency must intensify efforts in diversifying the productive base to other high-impact and growth-driving non-oil sectors like agriculture, manufacturing and services.”
He added: “For Nigeria to achieve strong growth of about 6-8 per cent that is needed to effectively tackle poverty and unemployment, we advise economic managers and policymakers to embrace structural reforms such as deregulating the oil & gas sector; harmonizing the multiple exchange windows, privatizing redundant state assets, fixing infrastructural problems of poor power supply and bad roads. These reforms will in no doubt deepen investor confidence and make the country a better destination for private investment.”
On inflation, “Yusuf stated that inflation is expected to trend higher in 2020 driven by myriads of factors such as implementation of new minimum wage which will stimulate aggregate demand, continued closure of the land border, higher VAT rate of 7.5 per cent, early disbursement of funds for budget implementation following the return of the budget cycle between January – December cycle and, negative real return in fixed income market which disincentivizes investment.”
He added that the performance of the trade sector in 2020 will be shaped by the direction of government policies, advising that continued protectionist measures of government will most likely limit growth in 2020.
“Elsewhere, the level of the country’s engagement in Africa Continental Free Trade Area (AfCFTA) scheduled to kick-off July 1, 2020, will also impact the performance of the trade sector.”
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