Godwin Emefiele, Central Bank of Nigeria’s Governor, says the country may not experience another recession despite global economic crisis caused by the COVID-19 pandemic and drop in oil prices.
According to Emefiele, the hope expressed is as a result of the country’s first quarter (Q1 2020) Gross Domestic Products which “turned out pleasantly at 1.87 percent,” alongside a moderated inflation rate, which also hinted of the MPC’s decision to slash its benchmark lending rate which is the first since March 2019 and the largest cut since 2015.
“What policy makers must do is to take actions that will necessarily stimulate growth and recovery. For Nigeria, although the Q1 2020 GDP turned out pleasantly, at 1.87 percent and rate of inflation somewhat moderated, Nigeria may escape a recession if concerted efforts are sustained to stimulate output,” Emefiele stated.
The CBN boss also stated that it would be inappropriate to contract the economy by tightening the lending rate, thus portraying monetary authorities as insensitive to prevailing weak economic conditions.
He added that there was a need for monetary authorities to signal a direction towards immediate recovery of the economy.
“As regards the option of holding previous policy stance, the MPC felt that a hold may indicate that the monetary authorities are insensitive to prevailing weak economic conditions.
“There is, therefore, the need to signal a direction towards immediate recovery. The Monetary Policy Committee also feels that a hold may slowdown the trajectory of the weakened economy, compared with a loosening stance, thereby slackening output growth,” he explained further.