The Central Bank of Nigeria (CBN) has raised alarms over the significant downturn in economic activities, citing various challenges impacting the nation’s economic landscape. Bala Bello, the CBN’s Deputy Governor of Corporate Services, expressed these concerns in a statement released on the bank’s website.
Bello highlighted the alarming decline in the country’s Composite Purchasing Managers’ Index (PMI), which plummeted to 39.2 index points in February 2024 from 48.5 index points in the previous month. He attributed this decline to a combination of factors, including exchange rate pressures, inflation, and security challenges.
In his statement, Bello lamented, “It is concerning to note that the Composite Purchasing Managers’ Index declined sharply to 39.2 index points in February 2024 from 48.5 index points in the previous month.”
He continued, “Economic activity has been contracting for eight consecutive months, mainly due to exchange rate pressures, rising input prices, security challenges, and other idiosyncratic headwinds. This calls for well-nuanced policy decisions targeted at price stability to forestall stifling economic activities and derailing output performance.”
Bello further underscored the troubling trend of rising inflation, despite sustained increases in the monetary policy rate. In February 2024, both food and core inflation surged, leading to an acceleration in headline inflation to 31.70 per cent from 29.90 per cent in the previous month.
“Of more concern is the rising inflationary trend despite sustained hikes in the monetary policy rate, with forecasts of further price increases in the near term,” Bello remarked.
He attributed this continued rise in inflation to high production costs, lingering security challenges, and exchange rate pressures, emphasizing that inflation is currently unacceptably high and requires decisive and coordinated efforts to curb it.
While commending the Federal Government’s initiatives aimed at addressing food insecurity, such as releasing grains from strategic reserves and supporting dry season farming, Bello stressed the need for coordinated efforts to combat inflation effectively.
The Monetary Policy Committee (MPC) had previously raised the country’s interest rate to 24.75 per cent in March, signaling proactive measures to address economic challenges. As the nation grapples with these economic headwinds, stakeholders await further policy interventions aimed at stabilizing the economy and fostering sustainable growth.