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An Embattled Economy in 5 Charts
The Minister of Finance, Wale Edun reported to the Council of State that the Nigerian economy is growing on a broad level.
This suggests that all the macroeconomic indicators such as productivity, employment, income and investments have increased within the last 7 months of the year.
“We looked at the data, or we reported on the evidence and the data of this half year for which data was available, compared to the first and second quarters of 2023. And in broad terms, the economy is growing.
“The balance of payments, in particular, the trade balance and a current account balance, are in surplus. The exchange rate is stabilizing, and inflation, though high, uncomfortably high for the liking of Mr President and his team, is slowing, and it is set to fall,” he said.
The NBS data on Nigeria’s Real GDP showed that the country’s Real GDP growth slowed down by 0.48% between Q4, 2023 and Q1, 2024. The Real GDP growth in Q4, 2023 stood at 3.46% and growth rate in Q1, 2024 stood at 2.98%.
Although there was a decline in the Real GDP growth rate between Q4, 2023 and Q1, 2024, the country’s Real GDP growth is better than it was in the Q1 of 2023.
This implies a decrease in the productivity/output of the country, especially in the first quarter of the year.
Although the Real GDP growth in Q1 of 2024 showed a decrease, the Stanbic IBTC Purchasing Managers’ Index (PMI) which measures the productivity of the private sector showed that the business environment experienced an expansion within Q1 and Q2 of 2024.
The PMI stood at above the 50.0 benchmark between January and June, but deteriorated in July.
According to the report, the contraction in business activities in July shows there has been a reduction in output and demand by customers as the country’s economy enters the Q3 of 2024.
This decline is as a result of the continued rapid rise in production cost and selling prices of goods and services within the last 7 months.
The Headline inflation, which reflects price stability, shows that the prices of goods and services have been on the increase since the beginning of the year. As of June, it stood at 34.19% from 33.95% recorded in May.
Despite the increase in the headline inflation rate, the month-on-month inflation rate slowly declined between the months of February and May, but sharply increased in June.
The increase in inflation rate has been blamed on the continued weakening of the country’s currency between January and July as most of the raw materials used in the production of goods and services are sourced abroad.
The increased demand of the dollar continues to put pressure on the Naira. The Naira reached its second lowest level in the year in the month of July.