As the year 2022 winds down, it will go down as a year of economic uncertainties both on the global and domestic fronts. All through the year, there was tension and much concern over the heightened risk of spillovers associated with the broadly weakening global recovery that have been further exacerbated by uncertainties emanating from lingering supply chain bottlenecks due to the Russia-Ukraine war and continued COVID-19 lockdown in China.
The implication? Global trade maintained a steady decline while inflation remained unabating across nations despite aggressive rate hikes by several central banks indicative of the possibility of global recession. Thankfully, it didn’t happen.
Experts have said the risk of yet another global recession would be extremely damaging for fragile economies still confronted with the lag impact of the 2020 recession, especially for emerging market and developing economies like Nigeria that are currently confronted with huge capital flow reversals and tightening global financial conditions.
On the domestic front, the year started with macro and micro-economic factors including heightened insecurity, inflation, high exchange rate volatility and an eight-month industrial action by Academic Staff Union of Universities. Those further compounded issued for the nation’s economy.
In spite of that, the year started with a January to December budget cycle of the federal government. During the course of the year, Nigeria recorded expanded fiscal deficit, resulting in more borrowing from both domestic and external markets to support the national budget.
According to data from the Debt Management Office, Nigeria’s total public debt stock (domestic and foreign) rose to N44.06 trillion in September 2022 from N42.84 trillion in June.
Real Gross Domestic Product (GDP) grew by 3.54 per cent (year-on-year) in the second quarter of 2022, compared with 3.11 percent in the first quarter of 2022 and 5.01 per cent in the corresponding quarter of 2021. The economy has thus maintained continuous growth for seven consecutive quarters, following its exit from recession in 2020.
Zainab Ahmed, minister of finance, budget and national planning, announced that the draft development agenda (Agenda 2050) of the federal government is currently being finalized for launch by her ministry.
Government targets to grow Nigeria’s GDP to $12 trillion by 2050, with an average real GDP growth rate of 7 percent and an end period per capita income of $33,000 per annum through the draft national agenda. Overall, there was contraction in economic activities during the year.
At the presentation of 2023 budget breakdown by the finance minister in the middle of the year, she disclosed that the federal government had budgeted for a two-dimensional scenario with particular reference to fuel subsidy removal by mid-2023 or the complete removal of it.
The current administration has continued to implement the scandalous fuel subsidy regime in a very controversial manner despite public calls for the authorities to abolish it.
The International Monetary Fund and other experts at the Nigerian Economic Summit #NES28 called for deliberate fiscal programmes to support the monetary policies and programmes by the Central Bank of Nigerian aimed at taming Nigeria’s rising inflation.
Widespread insecurity in Nigeria that caused interruption in the food supply chain, Russia-Ukraine war and election spending ahead of the 2023 polls unleashed much pressure on the Nigerian economy in 2022.
The federal government launched the safe school programme, a financing document for the security of public schools.
Monetary outlook
On the monetary side of the economy, the Central Bank of Nigeria on October 26 announced President Buhari’s approval to redesign N200, N500, and N1,000 banknotes. President Buhari unveiled the redesigned high-denomination banknotes on November 23rd, while circulation of the currency notes took effect from December 15.
Money market rates continued to fluctuate, reflecting liquidity conditions in the banking system. There was upward and downward movement in the external reserves to $38.46 billion at end-August 2022.
In the year under review, the Monetary Policy Committee of the CBN had raised benchmark interest rate by 250-basis points in two consecutive meetings with a focus to rein in Nigeria’s rising inflation rate. CBN raised the interest rate for the second time in November by 100-basis point – to 16.5 percent while other monetary parameters were left constant.
According to the National Bureau of Statistics (NBS) Nigeria’s inflation climbed to 21.47 percent in November from October’s rate of 21.09 percent, accelerating for the 10th straight month as food prices surged.
Among other monetary decisions, CBN announced a restriction on cash withdrawal, a tight money control stance to discourage hoarding of cash in line with the cashless policy drive of the central bank.
