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‘Nigeria in focus as UN fears recession over jumping debts, trade crisis next year’
Though the warning is for the global community, development economists have started internalizing the implications of the latest forecast contained in the Trade and Development Report 2019 released by the United Nations Conference on Trade and Development (UNCTAD).
Key revelation of the report suggested that the world economy is heading into troubled waters of possible recession in 2020 if economies fail to track issues bordering on borrowing amidst weak industrial productivity and the ugly forces of trade disputes.
UNCTAD warned that red flags have started emerging in the global segments of trade tensions, currency movements, corporate debt, a no-deal Brexit and inverted yield curves but there is little sign that policy makers are prepared for the storm going forward.
However, for economic stability, the UN body is calling on mainly fragile economies like Nigeria to among other things, rush policies focusing on boosting jobs, wages and public investment to replace policymakers’ obsession with stock prices, quarterly earnings and investor confidence. Currently, Nigerian land borders are shut and government debts kept rising yearly.
Business Hilights gathered that the report projects global growth to fall to 2.3% in 2019, compared with 3% in 2018. But several big emerging economies are already in recession and some advanced economies (including Germany and the United Kingdom) are dangerously close.
It said “The slowdown in growth in all the major developed economies, including the US, confirms that relying on easy monetary policy and asset price rises to stimulate demand produces, at best, ephemeral growth, while tax cuts for corporations and wealthy individuals fail to trigger productive investment.
“Trade growth is set to slow sharply this year following weakening global demand, compounded by the unilateral tariff actions of the United States administration; trade growth dropped to 2.8% last year and is likely to be closer to 2% this year.
Analysts said the warning should be taken very seriously by economic policy makers as relying significantly on the external forces powered by global oil price remains a deadly time bomb which may explode any time next year.
Recall that the Nigerian economy grew year-on-year in the second quarter of 2019 by 1.94%, riding on the back of stable oil prices to push the half-year (H1) growth to 2.02% with infinitesimal inputs from non-oil export which experts say is a dangerous trajectory after all.
Otherwise, when compared to 2.10% recorded in the first quarter of 2019, the Q2 real growth rate indicates a decline of 0.16% point.
Observers say the decline in Q2 may be due to the dip in crude oil production. Production slowed to 1.98 million per day as against 1.99 million recorded in the preceding quarter.
The oil sector grew by 5.15% while the non-oil saw a 1.64% increase during the quarter which does not show serious hope for the Nigerian economy, thus forcing the monetary policy chiefs at the CBN’s MPC meeting to continue brain cracking in the last couple of months on rates placements.