Unwise Economics Policies Caused High Inflation Which Dwarfs Nigeria’s Economic Outlook
The Organisation of the Petroleum Exporting Countries (OPEC) has said that high inflation has dwarfed Nigeria’s short-term economic outlook despite the recent improvement in fuel prices
Consequently, private sector optimism has been reduced just as consumer spending has been weakened.
The organization in its Oil Market Report for July 2022, said Nigeria’s crude oil production increased to an average of 1.238 million barrels per day (bpd) in June 2022, adding that the figure showed an increase of 5,000 barrels per day when compared to the 1.233 million bpd produced averagely in the month of May 2022.
“According to other sources, the country averaged 28.72 mbpd in June 2022, higher by 234,000 barrels per day month-on-month. Crude oil output increased mainly in Saudi Arabia, the United Arab Emirates, Iran, Kuwait and Angola, while production in Libya and Venezuela declined,” the report said.
But the report said in May 2022, the composite Consumer Price Index rose to 17.7 percent year-on-year from 16.8 percent y-o-y in the previous month.
“In response to the elevated inflationary pressures, the Central Bank of Nigeria raised its policy rate by 150 basic points to 13 percent bringing borrowing costs to the highest since April of 2020. It was the biggest rate hike since July of 2016 amid concerns that persistent inflationary pressures could weigh on the country’s fragile recovery.
Meanwhile, the Stanbic IBTC Bank Nigeria Purchasing Manger’s Index fell to 50.9 in June of 2022 from 53.9 in the prior month, pointing to the weakest improvement in business conditions in Nigeria’s private sector since January of 2021. Overall, the above-average fossil fuel prices support a firmly positive outlook for the rest of the year, but concerns over soaring inflation would increase uncertainty next year,” the report added.
The country spends most revenue from crude oil to import refined petroleum products, especially Premium Motor Spirit or Petrol because it has refused to deregulate petrol. This policy has hurt the Nigerian economy in such a way that it has become difficult for the government to fund other sectors of the economy. The government capped the price of petrol at N165 while the landing cost of the commodity is over N200 per litre. This has distorted the economic policies of the government in so many ways.