Global growth slowed down by about 50% between 2019 and 2022 — LCCI

By Adenike Agunsoye

The Lagos State Chamber of Commerce and Industry President, Asiwaju (Dr.) Micheal Olawale-Cole has said that Global growth, though positive, slowed down by about 50 per cent between 2019 and 2022 due to spiraling inflation, high energy cost, monetary policy tightening, continued disruptions caused by the Russia-Ukraine war, the energy crisis, weak consumer demand, and political upheavals.

This was revealed at the Chamber’s quarterly address on  Economic and business issues in Nigeria.

The President stated that looking further into 2023, the war in Ukraine and mounting sanctions on Russia may all continue to impact supply chains for commodities and shocks to financial systems across the world.

He said that the likely failings of the seven countries’ agreement on the Russian oil price cap, the resurgence of Covid infections and the likely return of restrictions, and renewed tensions in the middle east may all continue to keep oil prices upward and volatile in the short term.

He acknowledged that oil prices rose by 44.87 per cent in 2022, the highest in five years.

“With recent projections from the international monetary fund (IMF) that one-third of the world economy would be in recession, Nigeria, though not on the list, may feel like a recession for millions of Nigerians  if we bring into focus the latest multidimensional poverty index,” he added.

He recalled that 2022 third-quarter GDP report, Nigeria’s gross domestic product (GDP) grew by 2.25 per cent (year-on-year) in real terms in the third quarter of 2022, lower than the 3.54 per cent recorded in the previous quarter and 4.03 per cent in the corresponding quarter in 2021.

However, he stated that the growth indicates that the economy has recorded an eighth consecutive quarter of positive growth on the back of significant expansionary monetary policies.

“The growth was primarily driven by the services and agriculture sectors, which contributed 7.69 per cent and 1.34 per cent, respectively. The growth recorded in the sectors was higher compared to 7.37 per cent and 1.20 per cent recorded for the services and agriculture sectors in the previous quarter. However, the oil & gas and manufacturing sectors contracted by –22.67 per cent and –1.91 per cent, respectively.

“The decline in oil and gas was attributed to the massive cut in daily oil production, estimated at 1.20 million barrels per day (mbpd), due to oil theft and insecurity. Also, the high inflation rate and continuous rise in interest rates are major factors responsible for the contraction in the manufacturing sector. And with the excruciating burden of inflation, forex scarcity, high energy cost, and weakening purchasing power, many more production activities may be constrained in the coming months,” he said.

The Chamber recommended that, the Federal Government needs to sustain its targeted interventions in selected critical sectors like agriculture, manufacturing, export infrastructure, and tackling insecurity.

“We urge the government to keep track of plans to tackle oil theft, to boost oil exports and earn more foreign exchange. We also commend the government for the effort being made to-date to combat the cartel involved in oil theft. If these efforts had started earlier the nation would have made huge economic gains. We therefore appeal to the government to intensify these efforts.

“We also implore the government to deploy innovative thinking to tackle natural disasters like flooding by implementing environmental guidelines and establishing preventive infrastructure. The impact of climate change on agriculture is becoming more evident by the day, and quick response is critical to avert food insecurity and worsening food inflation.”

He advised that to reduce the shocks from disruptions and to supply chains for raw materials, manufacturers should be assisted with subsidised input and more allocation of forex for importing critical inputs.

He said while the Central Bank of Nigeria (CBN) embarks on monetary tightening to tame inflation, it should ensure that targeted concessionary credit to the private sector is sustained for MSMES.

Speaking on logistics, Olawale-Cole said that logistics has gone up due to the poor state of roads and the lack of connection among farms, factories, and markets.

The Chamber commends the Federal Government for the recent effort to improve infrastructure, such as the completion of the second Niger bridge, which is a key national infrastructure, with immense socio-economic benefits for the contiguous states and indeed the entire nation. The President said that the project was funded through the Presidential Infrastructure Development Fund (PIDF) created by president Muhammadu Buhari and managed by the NSIA.

He said the Chamber wants to see more of such developments for the benefit of the organised private sector.