Following the renewed surge of COVID-19 crisis spearheaded by the Omicron variant, renowned economic expert, Bismarck Rewane, has predicted tough times ahead for Nigeria’s economy in 2022. He predicted that Omicron would scuttle all the growth projections by global financial institutions about Nigeria’s Gross Domestic Product.
A speech delivered by Rewane at the LBS Breakfast Session, on 2021 Review and 2022 Outlook, pointed out that the outbreak of Omicron was a major threat to Nigeria’s growth projections for 2022. Rewane, the Chief Executive Officer, Financial Derivatives Company, stated that International Monetary Fund (IMF)’s 5.9 per cent GDP growth rate projection for the year 2022, World Bank’s 5.6 per cent, European Union (EU)’s 5.4 per cent and OECD’s 5.7 per cent respectively for next year were expected to see downturn amid resurgence in travel restrictions in Nigeria’s aviation sector, which is expected to worsen inflation risks and global supply chain, and monetary tightening becoming inevitable.
According to him, the emergence of the pandemic will witness global supply disruptions as countries reintroduce travel bans metamorphosing into high risk of persistent rise in global inflation. He explained that the Central Bank of Nigeria (CBN) would join other central banks across the world to tighten monetary policy and that this will raise debt service cost in the economy. He said: “COVID-19 will remain a threat to economies globally with the risk of more variants. The emergence of Omicron is a major threat to growth projections.
Global supply disruptions should persist as countries reintroduce travel bans High risk of persistent rise in global inflation. “IMF: 4.9 per cent (2021) 5.9 per cent (2022), World Bank: 4.3 per cent (2021) 5.6 per cent (2022), EU: 4.0 per cent (2021) and 5.4 per cent (2022) OECD: 4.5 per cent (2021) and 5.7 per cent (2022) are going to be disrupted by COVID-19.” Speaking further, the renowned economist added: “Monetary policy tightening by central banks across the world will raise debt service cost.
“Dominance of hybrid work system, de-globalisation will heighten inflation risk, more use of AI & robots in the work environment, a structural and strategic shift to electric vehicles in support of zero-carbon emission goals, the growth of e-commerce and the digital economy will intensify and, 2022 FIFA World Cup in Qatar are all going to be at risks if more efforts are not put in place to checkmate the alarming spread of Omicron pandemic globally.” On the impacts of the pandemic on Nigeria in 2022, Rewane said lingering global supply shortage will weigh on imported raw materials; supply disruptions, coupled with exchange rate pass through effect stoking inflation; likely monetary policy tightening in advanced economies triggering capital flow reversals, and resulting in currency weakness and increased debt service burden. He also projected a possible spike in COVID-19 infections, stressing that Nigeria could experience another record slump in fiscal revenue due to lower oil receipts, a decline in remittances and subdued economic activities. He also hinted that trade partners could face high inflation and slow growth in 2022.