Inflation plunges 5 million into poverty, salary value falls by 35%
The World Bank said Nigeria's situation is deteriorating, with economic performance weakening as inflation persists.
The Washington-based bank said so in its new Nigeria Development Update, which was launched Thursday in Abuja alongside the Nigeria Country Economic Memorandum.
The NDU report noted: “Nigeria is in a difficult and deteriorating economic situation. Nigeria's economic performance has weakened since Nigeria's previous Development Update was released in June 2022 under the title "The Continuing Urgency of Unusual Business".
The financial institution also cut Nigeria's growth forecast for 2022 to 3.1% from a previous forecast of 3.8%.
He said the revision was due to slow economic growth in the third quarter from a year earlier, dragged down by the oil sector and weak performance in other areas of the economy.
The bank also expects growth to slow to 2.9% in 2023.
The report said: “Nigeria's economic output growth has slowed and the World Bank is lowering its growth projections. Growth in real gross domestic product at market prices in the third quarter of 2022 was 2.4% year-on-year, due to a continued contraction in oil production (-22.7% year-on-year) and the slowdown non-oil growth (4.3% year-over-year, compared to 4.8% year-over-year in the second quarter of 2022). The World Bank now projects real GDP to grow 3.1% in 2022 and 2.9% in 2023-24, 0.3 percentage points lower than previous projections at the time of the June 2022 NDU.”
Salaries lose 35% in value
During his presentation of the reports, the World Bank's Lead Economist for Nigeria, Alex Sienaert, noted that the Nigerian minimum wage, which was worth N30,000 in 2019, could be valued at 19,355 N today.
This means that there was a loss in value of 35.48% between 2019 and 2022 as inflation eroded the purchasing power of Nigerians.
Sienaert noted: "Cumulative inflation between 2019 and 2022 was 55%."
He said rising inflation had caused Nigeria's purchasing power to fall.
In the NDU report, it was noted that consumer price inflation had increased, making it one of the highest in the world.
The report notes that although the CBN is making efforts to curb rising inflation by raising interest rates, its financing of the fiscal deficit through advanced ways and means has made things difficult.
Multiple Challenges
The report states: "The rate of consumer price inflation has increased and is currently one of the highest in the world. The consumer price index, which is already rising at a high pace, accelerated in 2022 through October, to reach 21.1% YoY, a 17-year high.
"High inflation has persisted in Nigeria for the past two decades, but since 2019 inflation has increased significantly, due to multiple currency exchange rates and exchange rate depreciation on the parallel market, the intensification of trade restrictions and the monetization of the public deficit by the Central Bank of Nigeria.
“In 2022, this situation has been exacerbated by soaring global food and energy prices due to the war in Ukraine and global supply disruptions. Since May 2020, the CBN has responded by tightening monetary policy, raising the policy rate by 500 basis points and increasing the cash reserve requirement by 500 basis points. However, the disinflationary impact of these measures has been mitigated by the continued monetization of the budget deficit, sector-specific subsidized credit arrangements, and increases in the costs of imported food and energy. »
The report also notes that Nigeria's exchange rate policy settings are stifling trade activity, investment and growth, and amplifying macroeconomic risks.
More than 5 million poor Nigerians
The World Bank also noted that inflation pushed five million Nigerians into poverty between January and October this year.
The report said, “As many as 5 million Nigerians were pushed into poverty due to inflation in 2022. The World Bank estimates that between 2020 and 2021, inflation has pushed about eight million more Nigerians below the poverty line, bringing the total number of poor to about 90 million. Rising inflation in 2022 is estimated to have pushed an additional five million Nigerians into poverty between January and September 2022, mainly due to rising prices of local staples, such as rice, bread, vegetables. yams and wheat, especially in non-rural areas. »< /p>
The Washington-based bank also said Nigeria's economy is highly vulnerable to shocks.
He warned that if inflation...
The World Bank said Nigeria's situation is deteriorating, with economic performance weakening as inflation persists.
The Washington-based bank said so in its new Nigeria Development Update, which was launched Thursday in Abuja alongside the Nigeria Country Economic Memorandum.
The NDU report noted: “Nigeria is in a difficult and deteriorating economic situation. Nigeria's economic performance has weakened since Nigeria's previous Development Update was released in June 2022 under the title "The Continuing Urgency of Unusual Business".
The financial institution also cut Nigeria's growth forecast for 2022 to 3.1% from a previous forecast of 3.8%.
He said the revision was due to slow economic growth in the third quarter from a year earlier, dragged down by the oil sector and weak performance in other areas of the economy.
The bank also expects growth to slow to 2.9% in 2023.
The report said: “Nigeria's economic output growth has slowed and the World Bank is lowering its growth projections. Growth in real gross domestic product at market prices in the third quarter of 2022 was 2.4% year-on-year, due to a continued contraction in oil production (-22.7% year-on-year) and the slowdown non-oil growth (4.3% year-over-year, compared to 4.8% year-over-year in the second quarter of 2022). The World Bank now projects real GDP to grow 3.1% in 2022 and 2.9% in 2023-24, 0.3 percentage points lower than previous projections at the time of the June 2022 NDU.”
Salaries lose 35% in value
During his presentation of the reports, the World Bank's Lead Economist for Nigeria, Alex Sienaert, noted that the Nigerian minimum wage, which was worth N30,000 in 2019, could be valued at 19,355 N today.
This means that there was a loss in value of 35.48% between 2019 and 2022 as inflation eroded the purchasing power of Nigerians.
Sienaert noted: "Cumulative inflation between 2019 and 2022 was 55%."
He said rising inflation had caused Nigeria's purchasing power to fall.
In the NDU report, it was noted that consumer price inflation had increased, making it one of the highest in the world.
The report notes that although the CBN is making efforts to curb rising inflation by raising interest rates, its financing of the fiscal deficit through advanced ways and means has made things difficult.
Multiple Challenges
The report states: "The rate of consumer price inflation has increased and is currently one of the highest in the world. The consumer price index, which is already rising at a high pace, accelerated in 2022 through October, to reach 21.1% YoY, a 17-year high.
"High inflation has persisted in Nigeria for the past two decades, but since 2019 inflation has increased significantly, due to multiple currency exchange rates and exchange rate depreciation on the parallel market, the intensification of trade restrictions and the monetization of the public deficit by the Central Bank of Nigeria.
“In 2022, this situation has been exacerbated by soaring global food and energy prices due to the war in Ukraine and global supply disruptions. Since May 2020, the CBN has responded by tightening monetary policy, raising the policy rate by 500 basis points and increasing the cash reserve requirement by 500 basis points. However, the disinflationary impact of these measures has been mitigated by the continued monetization of the budget deficit, sector-specific subsidized credit arrangements, and increases in the costs of imported food and energy. »
The report also notes that Nigeria's exchange rate policy settings are stifling trade activity, investment and growth, and amplifying macroeconomic risks.
More than 5 million poor Nigerians
The World Bank also noted that inflation pushed five million Nigerians into poverty between January and October this year.
The report said, “As many as 5 million Nigerians were pushed into poverty due to inflation in 2022. The World Bank estimates that between 2020 and 2021, inflation has pushed about eight million more Nigerians below the poverty line, bringing the total number of poor to about 90 million. Rising inflation in 2022 is estimated to have pushed an additional five million Nigerians into poverty between January and September 2022, mainly due to rising prices of local staples, such as rice, bread, vegetables. yams and wheat, especially in non-rural areas. »< /p>
The Washington-based bank also said Nigeria's economy is highly vulnerable to shocks.
He warned that if inflation...
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