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FX crisis takes toll on manufacturing sector - THE GUARDIAN

MAY 28, 2024

.NACCIMA wants paradigm shift in monetary policies to stabilise nation’s economy

The spike in the forex market that snowballed into unending instability is reverberating in key sectors of the economy.

The first quarter Gross Domestic Product (GDP) has slumped to 2.98 per cent as against the 3.46 per cent it was in the fourth quarter of 2023.

When President Bola Tinubu assumed office on May 29, 2023 (the second quarter), the GDP growth was 2.51 per cent. It then moved to 2.54 between July and September 2023 (the third quarter) and 3.46 per cent in the last quarter of the year.

Between September and December last year, the exchange rate hovered around N770 to the dollar.

As of yesterday, May 26, 2024, the exchange rate stood at N1,433, which is almost double the last quarter’s exchange rate.

The Nigerian Gross Domestic Product quarter one report by the National Bureau of Statistics (NBS) classified oil refining; cement; food, beverages and tobacco; textile, apparel, and footwear; wood and wood products; pulp paper and paper products; chemical and pharmaceutical products; non-metallic products, plastic and rubber products; electrical and electronic; basic metal and iron and steel; motor vehicles and assembly as part of the manufacturing sector.

The report also indicated an economy that has been on the slow lane in the past few months as nominal GDP growth of the manufacturing sector in the first quarter of 2024 was recorded at 8.21 per cent year-on-year. That was 9.64 per cent points lower than the figure recorded in the corresponding period of 2023, which was 17.85 per cent and 29.85 per cent points lower than the preceding quarter figure of 38.06 per cent.

Quarter-on-quarter even painted a gloomier picture as the growth of the sector stood at -17.67 per cent.

The year 2024 continued its disappointing runs as the contribution of the manufacturing sector to nominal GDP in the first quarter was 14.79 per cent lower than the figure recorded in the corresponding period of 2023 at 15.70 per cent and lower than the fourth quarter of 2023 at 16.04 per cent.

Real GDP growth in the manufacturing sector in the first quarter of 2024 was 1.49 per cent year-on-year which was also lower than the same quarter of 2023 and higher than the preceding quarter by 0.12 per cent points and 0.12 per cent points, respectively.

The growth rate of the sector on a quarter-on-quarter basis stood at a paltry 1.74 per cent.

The real contribution to GDP in the 2024 first quarter was 9.98 per cent lower than the 10.13 per cent recorded in the first quarter of 2023 and higher than the 8.23 per cent recorded in the fourth quarter of 2023.

This came as the National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dele Kelvin Oye, called for an urgent paradigm shift in the nation’s monetary policies to stabilise the economy and drive sustainable economic growth and development.

Oye made the call in a statement in response to the recent economic data released by the NBS.

He said: “It has become imperative to address the prevailing concerns regarding the Central Bank of Nigeria’s (CBN) monetary policies and the lack of a published 2024 fiscal policy framework by the Federal Ministry of Finance.”

He noted: “Despite the reported GDP growth of 2.98 per cent in the first quarter of 2024, it is evident that the high interest rate is not translating into tangible economic benefits for ordinary Nigerians, farmers, SMEs and large businesses who report lower investment and increased devaluation induced losses.”


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