CBN predicts 2.35% economic growth in 2020
The Central Bank of Nigeria, CBN, says available data on key macroeconomic indicators show prospects of improved output growth for the economy in 2020, saying that Nigeria’s economy will grow at 2.35 per cent in 2020.
CBN Governor, Godwin Emefiele, said revised projections for 2020, show that the economy is expected to grow by 2.50 per cent as predicted by IMF, 2.10 per cent as projected by World Bank, and 2.35 per cent as forecasted by CBN.
Emefiele, who made the prediction shortly after the 271st Monetary Policy Committee in Abuja, said the forecast was anchored on enhanced flow of credit to the real sector of the economy as well as sustained stability in the exchange rate.
He said other factors such as continued CBN interventions in agriculture and non-agricultural Small and Medium Enterprises, SMEs, and the effective implementation of the Economic Recovery and Growth Plan, ERGP, of the federal government, were equally critical to economic growth.
According to him, the downside risks to this projection are primarily the rising stock of public debt and lack of fiscal buffers, as well as the persistent security threat in major food-producing areas, poor and inadequate infrastructure and weak public and private sector investment.
“Although global output is projected to expand moderately in 2020, compared with the previous year, the overall medium-term outlook for the global economy remains uncertain, due to the persistence of several headwinds.
“These include: the lingering trade tensions between the US and its major trading partners; rising levels of both corporate and public debts; continued geopolitical tensions in the Middle-East; fragile recovery of manufacturing activities; and the narrowing policy space by which central banks in the advanced economies can respond to future macroeconomic shocks.
“In addition, predicted weather-related disasters could pose further threats to global output recovery. On the domestic side, available data on key macroeconomic indicators show prospects of improved output growth for the economy in 2020,” he said.
He said the MPC also noted the improved performance in the equities market, as the All-Share Index and Market Capitalization grew by 11.61 and 18.27 per cent, respectively, between end-October 2019 and 10th January, 2020.
Emefiele noted that this was indicative of the shift by domestic investors from the money market to the equities market in response to the Bank’s policy to restrict their investments in the OMO bills auction.
“The MPC also noted the improved performance and sustained resilience of the banking system, evidenced by the continued moderation of the Non-Performing Loans (NPLs) ratio from 6.6 per cent in October to 6.1 per cent in December 2019. The Committee noted that the improvement reflected the Bank’s continued deployment of heterodox policies to ensure that NPLs fell below the prudential benchmark of 5.0 per cent,” he said.