Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN) says the war between Russia and Ukraine poses a threat to the global economy.
Emefiele said this while presenting the communique issued at the end of CBN’s Monetary Policy Committee (MPC) meeting in Abuja on Tuesday.
He said that the resurgence of the COVID-19 pandemic in China was also threatening global economic growth.
“The MPC on Monday and Tuesday met, confronted with declining global growth and heightened uncertainties associated with adverse price developments across the world.
“These developments partly reflect the aftermath of the ongoing war in Ukraine, the backlash from the numerous sanctions imposed on Russia by major advanced economies.
“Also, the Chinese economy remained confronted with the lingering impact of the COVID-19 pandemic, total lockdown of major cities, significant distortions in the property market, and modest inflationary pressures.
“Consequently, advanced economy and emerging market economy central banks alike, are switching to monetary tightening to curb the sharp rise in inflation globally,” he said.
He said that economic interventions by countries across the world to cushion the effects of COVID-19 had also compounded the global economic challenges.
“The huge amount of stimulus deployed by various countries to ease the downsides of the COVID-19 pandemic, particularly in 2021, has predisposed the global economy to huge debt levels.
“Central banks in both the advanced and emerging market economies have thus commenced monetary policy tightening to curb rising prices.
“This could impact the recovery negatively and result in a rise in debt default as global financial conditions tighten,” he said.
He said that China had also re-introduced constraining measures to mitigate the spread of a new wave of the COVID-19 pandemic within its major industrial cities, resulting in a slowdown in production.
“In light of these headwinds, the International Monetary Fund (IMF) downgraded its forecast for global output growth for 2022 and 2023 to 3.6 percent apiece.
“Inflation continued to rise unabated across several advanced economies and is projected to remain high, at least in the medium term.
“Food and energy prices pushed higher to levels not previously recorded in four decades.
“This is due to tightening supply amidst closure of major trade routes that supply inputs for food and fertilizer, as well as the high price of energy,” he said.
“Emefiele added that in the Emerging Market and Developing Economies (EMDEs), inflation also remained high due to a combination of persisting high food and energy prices.
“Supply chain disruptions associated with the impact of sanctions against Russia; exchange rate pressure; capital flow reversals; as well as underlying legacy constraints also contributed to the high inflation,” he said.
The CBN governor, however, said that the Nigerian economy was projected to sustain its growth pattern in spite of the global outlook of uncertainty, due to interventions by relevant agencies of government.
“Even as global output growth recovery moderates, the domestic economy is expected to remain on the current path of recovery through 2022.
“This is hinged on the continued impact of stimulus by both the monetary and fiscal authorities to support the economy following the outbreak of the COVID-19 pandemic, ” he said.
