Stimulant is Necessary but not Sufficient - FDC

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Wednesday, April 15, 2020 / 06:02 PM / by FDC Ltd / Header Image Credit: Channels TV

 

The average size of the stimulus package as a percentage of GDP in advanced economies is 12%, e.g. in the US it is 11%. In SSA the average stimulus is 0.4% of GDP. The stimulus package is usually dimensioned against the depth of the anticipated recession.


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Nigeria is now expected to grow at -3.45% in 2020, a contraction of 5.72% from 2019. Therefore, the FGN stimulus of 0.34% of GDP is unlikely to move the needle significantly. Whilst stimulants are necessary to jumpstart fragile economies like Nigeria, structural policy changes are required to achieve macro-economic stability and long term sustainable growth.

 

These include the adoption of a market determined and efficient pricing model for exchange rates, refined petroleum products, fertilizers etc. The Nigerian authorities have commenced this process by adjusting the exchange rate by 15% and adopting a new approach to the prices of petrol. But the question remains - is this enough?


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In the link below, these and other questions were answered by Bismarck Rewane on Channels TV News on Easter Monday.

 

Watch Video

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