A financial analyst, Mr. Johnson Chukwu has predicted a lower double digit in the inflation rate of the country from May 2017.
Chukwu who made this prediction in an interview with Primetime Reporters in Lagos while reacting to the performance of the nation’s economy in the first quarter of 2017 argued that unless there was a major dislocation in the policies of the government especially as it relates to the change from the gunboat approach to managing the Niger-Delta crisis to a peaceful approach which seemed to be working, the economy would definitely bounce back.
According to him, “So, if nothing happens to disrupt that, I think production will keep improving and if we are producing about 2 million barrels per day and oil price remains above $50 per barrel, we should be able to earn enough from the foreign exchange to meet our necessities, our basic consumption of foreign goods and equipment.
“So, with that, we will have stability, we will improve the level of macroeconomic environment. Again, the uptick in the inflation we saw last year occurred between February and May, if by May the inflation rate has moved from about 15.5% to 16.9%, so by the time we get to May this year, the base effect on inflation will be a significance moderation in the inflation rate. So, we may see an inflation rate of lower double digit from May”.
He noted that the indices enumerated above were the factors that pointed to a fact that the macroeconomic environment was improving.
He continued, “We are going to achieve stability with FX, we are going to achieve improvement in production and in price, we are going to see lower exchange rate because of improved liquidity in the FX market, we are going to see a reduction in inflation rate because the dollar exchange rate has improved and secondly, the base effect of the high inflation that we had the previous year will also manifest in the current year.
“So, I want to believe that in the absence of any major dislocation, we should be able to sustain the current gains in the economic environment”.
On the performance of the Nigeria’s economy in the first quarter of 2017, Chukwu who is also the Managing Director of Cowry Asset Management Limited, observed that the economy in the first quarter of 2017 seemed to be gradually improving as according to him, one could see green spots in the economy even as he added that by the time the figures were released, one may still see a marginal decline in the Gross Domestic Product (GDP).
“First, we have seen the inflation rate that is coming down. Inflation has now dropped to 17.72%, we have seen an exchange rate that went down between February and March to as low as to about N360 t0 N380 per dollar or thereabout, then we saw an improvement in the supply of the US Dollar to the market. The improvement in the supply of dollar to the market will lead to improvement in the production of goods and services because manufacturers are now in a better position to access dollars for the importation of raw materials and equipment. Even those in trade, there was a lot more liquidity in the dollar so that some of them can really meet their obligations to their suppliers.
“So, these factors will lead to availability of goods and services and possibly reduction in prices. So, if you ask me, I think the first quarter should be, by the time we see the GDP figure from the National Bureau of Statistics, it should be an improvement over the first quarter of last year. Luckily for us, we have seen the oil price remain above $50 per barrel and there is also some improvements in production because the spate of attacks by the militants has also reduced.
“So, on a balance, I think I can see green spots in the economy”, he said.
Send your news, press releases/articles as well as your adverts to info@primetimereporters.com. Also, follow us on Twitter @reportersinfo and on Facebook on facebook.com/primetimereporters or call the editor on 07030661526, 08053908817.
