The Central Bank of Nigeria (CBN), at the high point of its Monetary Policy Committee (MPC) Tuesday, gave a bleaker economic outlook for Nigeria and the rest of the world in the nearest future.
Godwin Emefiele, the CBN chief, while announcing the committee’s decision in Abuja, noted that the extensive reverberations of the coronavirus outbreak might result in a monumental economic catastrophe that could cause a descent into recession.
“The committee reviewed the prevailing adverse conditions in the global economy such as the COVID-19 pandemic and the oil price shock as well as the likelihood of continued oil supply glut into the near future, focusing on the impact of these headwinds on the Nigerian economy.
“The committee observed that not only will the COVID-19 pandemic result in health crises, it will also result in massive economic crises that will force many countries into recession, including the leading industrialised countries.”
He said the MPC was of the opinion that the medical emergency would continually defy any monetary or fiscal intervention until productive scientific strategies and remedies are deployed to rein in spread.
Among his recommendations were internal movement restriction, close monitoring of the citizenry and urgent medical attention for isolated cases.
The apex bank chief gave the medium-term outlook of the world’s economy as uncertain in view of the parlous state of the global financial system and slow growth in global output.
Oil price plunge, global supply chain interruption disruption and shocks across major financial markets were notable threats to the earlier global growth forecast, Mr Emefiele said.
There were also fundamental risks like escalating public debt in a couple of developing countries and emerging economies, mounting corporate exposure in advanced economies and rampant volatility in the world economy, resulting in disruption of foreign investment flows.
According to him, the MPC gave credit to the apex bank for its exchange rate adjustment intervention, which had harmonised all market rates.
The MPC advised that government should deemphasise its reliance on oil through economic diversification and broadening of its tax revenue base.