The Stagflation Spectre Looms - LBS Executive Breakfast Session - Oct 2019

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 Friday, October 4, 2019   / 05:25AM  /  By Bismark Rewane & FDC    / Header Image Credit: wallstreetmojo.com

 

Unlikely But Probable Stagflation

 

Stagflation is a combination of undesirable economic outcomes - stagnant growth and rising inflation. It is such a rare occurrence with very few examples.

 

The last incident of global stagflation was between 1974-1976* when oil prices quadrupled, inflation spiked to 25%, growth slumped and interest rates jumped.

 

Today, the global economy is teetering on the brink of a recession while Nigeria faces the unlikely spectre of stagflation due to a combination of factors including vulnerability to exogenous shocks and a rising import bill.

 

The CBN seems to be leaning towards a combination of options that will keep interest rates high until inflation falls below the upper limit of its 6-9% target. However, this looks most unlikely if you consider the full implications of the border closure on prices.

 

 

External Imbalances Are Growing

 

As if things were not already complicated, the price of Brent crashed today below $57pb. This is at a time when Nigeria's external buffers are dwindling.

 

External reserves lost 4.04% in September (now at $41.77bn). With pale GDP growth of 1.94% (Q2'19), there is a good reason for fiscal stimulus with an attendant multiplier effect on national income.

 

That is why to some, the prudent, conservative and contractionary budget of N9.79trn proposed for 2020 is difficult to justify.

 

In this edition of the LBS Breakfast session, Bismarck Rewane and the FDC Think Tank put these economic and political issues in perspective for the benefit of your business and portfolio strategy.

 

Kindly download:   The LBS Executive Breakfast Session - October 2019  

 

Editor's Note (*):

"The one word with a chilling effect - stagflation - is best known from its 1970s incarnation, when it wrought havoc throughout the UK. The combination of stagnant GDP growth and high inflation pushed the UK to the edge of bankruptcy and forced the then chancellor, Denis Healey, to call the International Monetary Fund for a bailout loan. The resurrection of the word can only spell bad news."

 

Reference/Related Links:

1.           The spectre of stagflation looms over the economy. This time it's scarier than ever - The Guardian, UK, Oct 30, 2016

2.          The Theoretical Difference between a Recession and Stagflation: Global Case Studies - Oct 27, 2016

3.           MPC Meeting Preview: Confronting Stagflation - Mar 22, 2016

4.          Countercyclical Spending, the Remedy for Stagflation - Oct 23, 2015

5.           Is Nigeria Suffering from Stagflation?? - May 16, 2015

 


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Credits

The power-point presentation  OCTOBER 2019 (Re: The Stagflation Spectre Looms)  first appeared in FDC on Thursday, October 03, 2019; and is republished under SLA terms.

 

DISCLOSURE: This content reflects the views of the author(s) drawing on prior research and experience in their areas of expertise. It is not a reflection of our institutional position; and is not a recommendation to buy or sell securities or the products mentioned therein. Proshare Content and their owners, managers, employees, and assigns (collectively the "Company") are bound to comply with in-house governance rules requiring this necessary disclosure to ensure that readers, subscribers and consumers understand what the content is. All T&C applies.

 

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Previous LBS Executive Breakfast Sessions

1.               Fasten Your Seatbelts, There Is Turbulence Ahead - LBS Executive Breakfast Session - Sept 2019

2.              Global Uncertainty - Is This The New Economic Order?- LBS Executive Breakfast Session - Aug 2019

3.               Nigeria and The Excess Supply of Intellectual Dishonesty - LBS Exec. Breakfast Session - July 2019

4.              Differentiating Between Regulatory Enforcement and Official Tyranny- LBS EBS - June 2019

5.               The New Agenda: Continuity or Change? - LBS Executive Breakfast Session - May 2019

6.              Policy Momentum, Management Inertia - LBS Executive Breakfast Session - Apr 2019

7.               The Class War Between The Poor and The Very Poor - LBS Executive Breakfast Session - Mar 2019

8.              Election 2019 - The Political Anti-Climax - LBS Executive Breakfast Session - Feb 2019

9.              2019 - A Year of Anxiety, Fear and Uncertainty

10.           2019 - A Year of Trepidation And Growing Uncertainties - LBS Executive Breakfast Session - Dec 2018

11.            Political Headwinds and Economic Challenges - LBS Executive Breakfast Session - Nov 2018

12.            No Stability, No Democracy Bumpy Road Ahead - Fasten Your Seat Belts - LBS EBS - Oct 2018

13.            The Players Change but The Game Remains - LBS Executive Breakfast Session - Sept 2018

14.            Watching From The Political Balcony - LBS Executive Breakfast Session - Aug 2018

15.            From Russia with Tears and the New Economic Disorder - LBS EBS - July 2018

16.            The New Political Calculus - LBS EBS - June 2018

17.            Make Hay In May, While The Sun Still Shines - LBS EBS - May 2018

18.           Talking Economics and Thinking Politics - LBS EBS - April 2018

19.            At $65, Oil is Up 22.4% in 12 Months, Can It Fall Again?? - LBS EBS - March 2018

20.          2019 - The Changing Political Calculus - LBS EBS - February 2018

21.            The FDC 2018 Periscope - The Good, The Bad and The Annoying

22.           There is More to Economic Growth Than Numbers - LBS EBS - December 2017

23.           The More Things Change The More They Stay The Same - LBS EBS - November 2017

24.           Basking in the Afterglow of Reform - LBS EBS - October 2017

25.           Buhari Returns: Hope High and Challenges Daunting - LBS EBS - September 2017

26.           Nigerian's Domestic Debt: A Ticking Time Bomb - LBS EBS - August 2017

27.           Nigeria: Is The Recovery For Real? - LBS EBS - July 2017

28.          Nigeria: Recovery Slow, Steady but Painful - LBS-EBS June 2017

29.           Nigerians May Escape from Anxiety with a Stronger Naira - LBS EBS - May 2017

30.          Naira Gains as the CBN Tries to Catch a Falling Knife - LBS EBS - April 2017

31.            Economic Reform by Coincidence - Does It Really Matter? - LBS EBS - March 2017

32.           Nigeria's Economic Reform - Resist Now and Regret Later - LBS EBS - Feb 2017

33.           2017: A Year of Fear Laced with Hope

34.           Running Faster to Stand Still - LBS EBS - Dec 2016

35.           Recovery Fades, Strong Regulator versus Efficient Markets - LBS EBS Nov 2016

36.           Nigeria Oil Shock 2.0 and the Treacherous Path to Recovery - LBS EBS Oct 2016

37.           Recession: how deep and for how long? - LBS EBS Sep 2016

38.           Policy Daunting, Markets Uncertain, Citizens Groan - LBS EBS - Aug 2016

39.           With Inflation at 16.5%,Nigeria Stumbles into the Reform Path-LBS EBS Jul 2016

40.          Sell in May and Go Away - LBS EBS - May 2016

41.            The Squandering of a Golden Economic Opportunity - LBS EBS Apr 2016

42.           Naira Weakness Undermines Economic Stability - LBS EBS - March 2016

43.           2016: The Year of Stark Economic Reality - LBS EBS - Feb 2016

44.           2016 - A Year of Growth and Commodity Turmoil - LBS EBS - Dec 2015

45.           Fantasy economics & the value of the Naira - LBS EBS - Nov 2015

46.           All the Presidents' Men - Dream team or Lightweights - LBS EBS - Oct 2015

47.           Loot Recovery? Restitution is no Retribution - LBS EBS - Sep 2015

48.          Nigeria goes back to the Future: Market vs. Control Economy - LBS EBS - Aug 2015

49.           Buhari: Slow Start or Guessing Game - LBS EBS - July 2015

50.           Reflating a Strangulating Economy - LBS EBS - Jun 2015

51.            Leadership Change is not a System Change - LBS EBS April 2015

52.           Is the Naira Ever Going to Recover? - LBS EBS - March 2015

53.           Nigeria at Crossroads: Stability or Change - Which do You Prefer? - LBS EBS - Feb 2015

54.           The Falling Naira: Are you Prepared? - LBS EBS- Jan 2015

55.           Octobers can be eventful - LBS EBS - Nov 2014

56.           Inflation Up, Stock Market Down, What Next? - LBS EBS Sep 2014

57.           MUMU-NOMIKS vs. Economics - LBS EBS - Jun 2014

 

Proshare Nigeria Pvt. Ltd. 

 

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Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

 

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