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.