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· The central bank said last week Nigeria is hopeful that thecountry may avoid a recession riding on the back that the drop in GDPcould be less than the 3.4% projected by the International Monetary</strong Fund
· What will be worrying the west African country is theshrinkage in its manufacturing PMI, which fell to 42.4 in May afterstaying above 50 for 36 consecutive months.
The central bank said last week Nigeria is hopeful that the country may avoid a recession riding on the back that the drop in GDP could be less than the 3.4% projected by the International Monetary Fund. What will be worrying the west African country is the hrinkage in its manufacturing PMI, which fell to 42.4 in May after staying above 50 for 36 consecutive months.
The manufacturing PMI compiled by Lagos-based FBNQuest Capital declined to 43.3 in May from 45.8. PMI staying above 50 is considered to be signifying positive vibes in the economy, while any figure below 50 is considered to be lull in the economic activities.
In the meantime, the data released by Nigerian statistics agency revealed that consumers are feeling the impact of the disruption in
economic activities. At least 79% of respondents in a survey said their incomes have decreased since mid-March, when restrictions were imposed to curb the spread of the pandemic. The survey says that 51% of households were forced to buy less food due to higher costs since the pandemic.
Nigeria’s central bank took 460 billion naira (US$1.2 billion) from lenders as additional cash reserves for missing regulatory thresholds, some sources opined. In April also, the banking regulator took 1.47 trillion naira from almost 30 lenders for falling short of cash-reserve and loan-to-deposit ratios. It may be noted that thecentral bank in January increased the cash-reserve requirement to 27.5% from 22.5% to curtail excess liquidity in the banking sector, which it said could stoke inflation.
