Nigerian Economy Not Growing - Sanusi

THE Central Bank of Nigeria (CBN) has disclosed that the Nigerian economy is currently experiencing growth challenges not previously anticipated by policy makers.

Governor of the CBN, Mallam Lamido Sanusi, made the disclosure in Abuja, on Tuesday, at a press conference held shortly after the 86th edition of the Monetary Policy Committee (MPC) meeting.

The apex bank boss said because of the growth challenges the economy was going through, the National Bureau of Statistics had revised the Gross Domestic Product (GDP) for fiscal 2012 downward to 6.61 per cent from the earlier projection of 6.85 per cent.

“The estimates revealed a real GDP growth rate of 6.48 per cent in the third quarter of 2012, up from 6.39 per cent in the second quarter, but lower than the 7.37 per cent recorded in the corresponding period of 2011,” he said.

Sanusi disclosed that the committee traced the growth challenges to the decline in the contribution of oil sector which, he said, became apparent in the last half of 2011.

Also he stressed the decline in the contribution of agriculture sector to growth since the third quarter of 2011, in spite of investment in agricultural transformation initiatives of the Federal Government.

The apex bank governor disclosed further that the growth challenges in the near to medium term would be further compounded by the recent flooding in several parts of the country, even when the cost to the economy was yet to be estimated.

The inflationary pressure which re-emerged in October, 2012 was, according to the apex bank boss, a contributory factor to the growth challenges.

According to the governor, the year-on-year headline inflation inched up to 11.7 per cent in October 2012 from 11.3 per cent in September, while food inflation increased to 11.1 per cent from 10.2 per cent in September.

In its policy measures consideration, Mallam Sanusi said the committee observed the conflicting price signals coming from the latest inflation numbers which, it said, created uncertainty as to the appropriate policy stance at this period.

However, he said since the factors underpinning the inflationary pressure were mainly structural, a monetary response may not be appropriate this time.

He said the committee, by a unanimous vote, decided to maintain the current policy stance of retaining the Monetary Policy Rate (MPR) at 12 per cent with a corridor of plus or minus 200 basis points around the mid point.