CBN Says Nigeria’s Economy Contacts In May

The Nigerian economy contracted in May, a data  from the Central Bank of Nigeria said

The personal statements of some members of the Monetary Policy Committee indicated that the Purchasing Managers Indexes  for the manufacturing and non-manufacturing sectors contracted in May.

“Manufacturing and non-manufacturing PMIs contracted in May 2021, despite growth of the manufacturing sector in Q1:2021, points to the possibility of the buildup in the inventory of finished goods, as a result of low purchasing power,” an MPC member, Folashodun Shonubi, said.

Shonubi,  the deputy governor, operations directorate at CBN, Mr Folashodun Shonubi, advocated widening of the scope and coverage of the development finance interventions, targeted at household and small businesses to address the challenge of low aggregate demand and encourage further productivity.

He said, “The increasing need to refocus the economy and look beyond oil stares us in the face, as many jurisdictions scale down further investments involving use of fossil fuel.

“Interestingly, the speed and source of our recovery underscored the fact that recent economic downturn was strictly on account of external shock and not due to a weakness in domestic macroeconomic fundamentals.”

He said the country must therefore take more steps to enhance domestic investment and productivity, as well as reinforce the internal stabilisers of the economy.

He said considering the observed gradual but steady positive outcomes of the current policy mix, he was convinced that as the economy strengthened implementation of the intervention programmes, it should maintain status quo and allow more time for the manifesting gains to fully mature.

He commended the Federal Government for the progress on further reopening of the economy, as a result of facilitating the first round of vaccination and concluding the ordering of more doses of the vaccine.

On what more could be done to promote productivity, Shonubi implored the government to strengthen collaboration with the CBN, in relation to working with institutions that were critical to facilitation of trade and economic activities.

“This will be important to consolidating the common progress made so far. In the same vein, aggressive implementation of deliberate policy to promote domestic productivity and marketability, including standardisation of product quality, packaging etc. and improvement of port process, among others, would aid further growth in output,” he added.