Better to be safe than sorry Decision Liquidity Ratio Asymmetric - - PowerPoint PPT Presentation

CBN BN Say ays s – As s You Were

“Better to be safe than sorry”

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Decision

MPR CRR Liquidity Ratio Asymmetric Corridor 14% 14% p.a p.a 22.5% p.a 30% 30% +200/ 200/-50 500 bps

Infla lation tion up again n August – 11.23%

Clear & Present Danger

M2 Growth rowth 2.98% Slowing wing GDP GDP 1.7% (2018)

Monetary Fiscal Consolidation

Unemp employmen loyment 20%* Minimum nimum wage N18,000 - ?? Elect ection ion spend nding ing Subsid sidy N2.4bn daily

External Factors –Mixed Bag

Depleting External Reserves – down $4bn Stock market wobbling – down 13.41% Oil price & revenue up ($82pb) Investment flows - $5bn Naira-Dollar Weak but stable IEFX - N364/$ Positive Trends Negative Trends US interest rates – 0.25% p.a

SSA- Macroeconomic Scorecard

Country GDP Growth Rate (Q1’18) Inflation (August’18) Monetary Policy Rate (Aug/Sept) Nigeria 1.5%(Q2’18) 11.23% 14% Ghana 6.8% 9.9% 17% Kenya 1.9% 4.04% 9.0% (June) Angola

• 2.2%

18.56% 16.5% South Africa

• 0.7% (recession)

4.9% 6.5%

South Africa in recession – (0.7%) Angola adjusted its currency Inflation across SSA declining – continent’s average declined from 11% to 9.7% Election in Cameroon in October

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Economic Impact

Debt service 50% of Revenue GDP Growth 1.7% (2018) M2 Growth 2.98% Credit Squeeze 0.81% Lending rates 26%p.a

To the Nigerian

WORKER MIDDLE CLASS ELITE/ AFFLUENT

Domestic Food Prices School Fees House rent Intl School Fees Summer Ticket Unemployment Higher Stay High Flat Marginally Higher House rent Increase Medical Increase Flat lining Higher House rent Increase Medical Increase Medical Increase

Struggling & Crying Down & Out No shaking

State-by-State Inflation: Kwara the Best

States with the lowest inflation (%) States with the highest inflation (%)

Kwara – 8.25% Borno – 9.88% Benue – 10.11% Yobe – 12.9% Lagos – 12.64% Enugu – 12.52%

Commodity Prices – Mainly Higher

Commodities Palm Oil (5L) Yam (3 tuber) Tomatoes (50kg) Garri (50kg) (Yellow) Rice (50kg) Flour (50kg) Beans (Oloyin) (50kg)

N13,000 N18,000 N11,200 N26,000 N1,900 N12,000 N2,600 N2,000

Price Elastic Price Inelastic

Current Prices Direction

Sep’16 11,000 19,500 10,000 18,000 19,000 2,100

% Change

23.08 9.52 20 27.78 15.79 1.82 58.82

5 reds, 2 greens Minimum Wage + = Purchasing power

External Reserves - $43bn Agric output down in Middle-Belt

Outlook

Increased unemployment + underemployment (41%) GDP - 1.7% (2018) Inflation will increase again – 13% (Year end) MTN saga will be amicably resolved Minimum wage will increase to approximately N45,000