The Central Bank of Nigeria (CBN) has said that the country’s economy will be weaker in 2021 due to rising inflation.
This was contained in the survey carried out by CBN’s statistics department on ‘Inflation Attitudes Survey for Q4 2020’ released on Monday.
According to the survey report, majority of respondents (60.8 percent) believed that Nigeria’s economy would end up weaker in the next 12 months if prices started to rise faster.
The responses, according to the apex bank, are consistent with the notion that inflation constrains economic growth.
In addition, majority (66.7 percent) of the respondents expected prices to increase by at least 3 percent over the next 12 months, while only 15.1 percent respondents had hopes that prices would either go down or remain the same.
The report showed that given a trade-off, most respondents would prefer higher interest rates to higher inflation.
In another CBN’s statistics department report on ‘consumer expectations survey for Q4 2020’ released on Monday, most respondents expect prices of goods and services to rise in the next 12 months.
“The major drivers are: savings, food and other household needs, education, purchase of appliances/ durables, purchase of car/motor vehicle, and purchase of houses,” the report read.
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Furthermore, the report also showed that consumers expect borrowing rate to rise and they anticipate an appreciation of the naira by the next 12 months, while consumers expect unemployment rate to rise by 2021.
Meanwhile, consumers’ overall confidence outlook in this quarter (Q4 2020) was pessimistic.
“Respondents attributed this unfavourable outlook to declining economic conditions, family financial situation and declining family income.”
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However, consumers’ overall confidence outlook for first quarter of 2021 (Q1 2021) and next 12 months was optimistic.
CBN said: “This positive outlook could be attributed to the expected increase in net household income, an anticipated improvement in Nigeria’s economic conditions and expectations to save a bit and/or have plenty over savings in the next quarter and the next 12 months.”