April 20, 2020

Nigeria Economic Update (Issue 13)

The manufacturing sector PMI declined from 58.3 points to 51.1 points between February and March 20201. The slowdown was triggered by reduced growth in 7 subsectors including electrical equipment, chemical and pharmaceutical products, primary metals and non-metallic mineral products. Similarly, the non-manufacturing PMI index declined to 49.2 percent, falling below the 50 percent threshold for the first time in over 2 years1. The overall contraction is due to the depression in global economic activity which has led to a reduction in new orders, inventory and consequently employment levels across the manufacturing and non-manufacturing sectors. In the coming months, the reduced activity across both sectors is expected to continue as a result of the decline in global demand for exports and the reduction in local consumption. In the meantime, some manufacturers can switch to producing essential commodities that are required to tackle the pandemic. In addition, the cash transfers by the government should be distributed to manufacturing and non-manufacturing workers that would be laid off or furloughed as a result of the pandemic.

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Nigeria Economic Update (Issue 10)

Nigerias inflation rate remained above CBNs bandwidth of 6-9 per cent. Specifically, the inflation rate increased slightly from 9.55 percent in December 2015 to 9.62 percent in January 20165. The Core sub-index remains the main driver of inflation in Nigeria. The higher prices of items in the Core sub-index such as clothing and foot wears are reflective of higher domestic production costs as a result of the decline in the value of the naira relative to the dollar. However, in the period, the price increase was moderated by the stable price of Premium Motor Spirit (PMS). Going forward, without any sustainable policy measure to prevent the further depreciation of the naira, inflation may exceed the current single digit inflation rate in the near term.