The Lagos Chamber of Commerce and Industry (LCCI) has painted a gloomy picture of the global economy in 2023.
In its New Year statement on the economy, signed by Director-General, Dr. Chinyere Almona, the chamber predicted a recession or substantial global economic slowdown owing to a number of limiting factors.
According to the statement these factors include; persistently high inflation, aggressive global monetary policy tightening, continued disruptions caused by the Russia-Ukraine war and the energy crisis, weak consumer demand and political upheavals.
“As we enter the year 2023, the global economy, beyond the mounting uncertainties, may continue to face a confluence of challenges.
“With several shocks suffered by many economies and over a greater portion of 2022, various projections and analysis of economic conditions across regional blocs point to the likelihood of a recession or a significant slowdown of growth in 2023.
“This is due to spiraling inflation, high energy cost, monetary policy tightening, and weakening consumer demand. Global growth, though positive, slowed down by about 50 percent between 2019 and 2022.” The statement read.
On the domestic front, the Chamber identified; rising inflation rate, tight monetary policies, an unstable currency, foreign exchange scarcity, debt burden, currency management, food supply disruptions, exchange rate volatility, and election spending as major factors that would drive economic indicators in 2023.
The Chamber also expects further hike in Monetary Policy Rate (MPR) in the first month of the New Year to check inflation and capital flight, noting that in 2022 the Apex Bank applied tightening policy to steady prices in the system.
“During the year 2022, the Central Bank of Nigeria (CBN), in response to the spiraling inflation rate, deployed a tightening monetary policy to stabilize prices. The rates rose from 11.5% in January and peaked at 16.5% as at November 2022.
“This is expected to rise further during the MPC meeting in January to 17% to curb the persistent inflation and prevent capital flight.”
The Chamber warned that rate hikes alone would not curb inflation apart from tackling the main factors that trigger it such as; “food supply disruptions, high energy cost, scarcity of FOREX, and the security challenges around agricultural production locations that have fuelled low production and high logistics cost”.
“In 2023, we need fiscal interventions to support strategic sectors like manufacturing, agriculture, transport logistics, and more allocation of FOREX to productive sectors”. The statement further read.
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