CBN worries over declining economic activities

The Central Bank of Nigeria Expresses Concern Over Declining Economic Activities

The Central Bank of Nigeria (CBN) has expressed concern over the declining economic activities in the country, according to a statement by the CBN Deputy Governor of Corporate Services, Bala Bello.

Composite Purchasing Managers’ Index Declines

The country’s Composite Purchasing Managers’ Index (PMI) declined sharply to 39.2 index points in February 2024 from 48.5 index points in the previous month. This decline in economic activity has been attributed to exchange rate pressures, inflation, and security challenges.

Challenges and Policy Decisions

Bello emphasized the need for well-nuanced policy decisions targeted at price stability to prevent further decline in economic activities and output performance. He highlighted the impact of exchange rate pressures, rising input prices, security challenges, and other idiosyncratic headwinds on the contraction of economic activity for eight consecutive months.

Inflationary Trend and Efforts to Curb It

Despite sustained hikes in the monetary policy rate, both food and core inflation rose in February 2024, leading to an acceleration in headline inflation to 31.70% from 29.90% in the previous month. Bello attributed this continued rise in inflation to high production costs, lingering security challenges, and exchange rate pressures. He emphasized the need for coordinated efforts to curb the rising inflation, which reached 33.22% in March.

Importance of Government Initiatives

Bello commended the Federal Government’s initiatives addressing food insecurity, such as releasing grains from strategic reserves, distributing seeds and fertilizers, and supporting dry season farming. He emphasized the importance of these initiatives in mitigating the adverse impact of inflation on citizens’ purchasing power, investment decisions, and overall output performance.

Monetary Policy Rate Increase

The Monetary Policy Committee (MPC) raised the country’s interest rate to 24.75% in March as part of efforts to address the economic challenges.

SDGs, Targets, and Indicators

1. SDG 8: Decent Work and Economic Growth

   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries
   • Indicator 8.1.1: Annual growth rate of real GDP per capita

   The declining economic activities mentioned in the article are connected to SDG 8, which focuses on promoting sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. The article highlights the contraction of economic activity for eight consecutive months due to exchange rate pressures, inflation, and security challenges. This indicates a decline in economic growth, which is contrary to the target of sustaining per capita economic growth. The Composite Purchasing Managers’ Index is an indicator that can be used to measure progress towards this target.

2. SDG 1: No Poverty

   • Target 1.2: By 2030, reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions
   • Indicator 1.2.1: Proportion of population living below the national poverty line, by sex and age

   The rising inflation mentioned in the article has adverse effects on citizens’ purchasing power. This connects to SDG 1, which aims to end poverty in all its forms everywhere. The article mentions the high inflation rate and its impact on citizens’ purchasing power, indicating an increase in poverty. The proportion of population living below the national poverty line is an indicator that can be used to measure progress towards this target.

3. SDG 2: Zero Hunger

   • Target 2.1: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious, and sufficient food all year round
   • Indicator 2.1.1: Prevalence of undernourishment

   The article mentions the Federal Government’s initiatives addressing food insecurity, such as releasing grains from strategic reserves and supporting dry season farming. This connects to SDG 2, which aims to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture. The initiatives mentioned in the article contribute to ensuring access to safe, nutritious, and sufficient food all year round. The prevalence of undernourishment is an indicator that can be used to measure progress towards this target.

Table: SDGs, Targets, and Indicators

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Fuente: punchng.com

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