The strong economic growth recorded in the second quarter of 2023 on the back of robust Purchasing Managers’ Index (PMI) may not be sustained as a silt of the soaring consumer prices occasioned by President Bola Ahmed Tinubu’s economic reforms.
The second quarter of 2023 showed stronger growth as the PMI returned to expansionary territory in April, indicating a recovery from the cash crunch that affected economic activity in the first quarter of2023. The Central Bank of Nigeria’s (CBN) announcement in March that it would allow old naira notes to remain legal tender until the end of 2023 improved cash”, said analysts at United Capital.
The result was increased spending in the second quarter of 2023, leading to firms scaling up production and higher purchasing activity.
Ot was expected that this improvement in economic conditions would bolster growth in the second quarter of the year.
But unfortunately, the United Capital Global Macro H1-2023 Review and H2-2023 Outlook said, “looking ahead, the uptick in economic activity witnessed in the second quarter of 2023 is not expected to be sustained in the second half of the year (H2 2023) due to soaring consumer prices resulting from President Bola Tinubu’s economic reforms (fuel subsidy removal and foreign exchange (forex) rates unification).
“These reforms will exert substantial upward pressure on consumer prices in the second half of 2023, with inflation projected to average 25.1 per cent for the entire year, marking the highest annual rate since the 1990s.
