Nigeria Economic Direction for September 2022


As the second half of the year, 2022 is much underway, the prospects of the global economy remain subdued by various headwinds. The lingering impact of the COVID-19 pandemic and the resultant supply chain disruptions, fluctuations in the commodity markets, unabating global inflation, and tightening financial conditions have steepened the slowdown in global growth.

The Russian-Ukraine war has further dampened economic prospects as energy prices continue to soar, fuelling volatility in the energy market especially as winter fast approaches. Efforts to moderate oil prices have led to the plan of a price cap by the G7. The initiative is an additional attempt to utilize economic pressure on Moscow for invading Ukraine, reduce its war chest to prosecute the war in Ukraine, and moderate rising energy prices, which are fuelling inflation across countries. This is even more so as the potency of central banks alone to achieve general price stability through policy normalisation is yet to be seen.  The effective implantation of the price cap will however require concerted global effort and consensus, which is almost elusive now.

By the end of the year, global output growth is expected to slow to 3.2 percent from 6.1 percent in 2021. Output growth in advanced economies is expected to slow to 2.5 percent from 5.2 percent, while in emerging economies it is expected to slow to 3.6 percent from 6.8 percent.

The slowdown in output growth in some advanced economies which has not been corresponded by a proportionate decline in jobs has led to a need for re-interrogation of the concept of economic recession as it is known today.


Output Growth Outlook

Output growth is projected to remain in the positive region despite the numerous headwinds faced by the economy, which include legacy structural bottlenecks, acute energy shortages, infrastructural deficits, limited fiscal policy headroom, the rising cost of production, and scarcity of foreign exchange.

Price Development

The headline inflation rate in Nigeria rose to a 17-year high of 19.64 percent in July 2022, from 18.6 percent in June 2022 the highest since September of 2005.

The food inflation component increased to 22.02 percent, from 20.60 percent, the highest since May last year, while the core inflation component increased to 16.26 percent from 15.75 percent.  The main drivers were gas, liquid fuel, solid fuel, and passenger transport by road and by air.

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Price Outlook


Table 1: Inflation forecast for August 2022 in Percent







With a weakening naira mounting upward pressure on prices through import bills, unabating insecurity, and increasing liquidity injections associated with fiscal, monetary, and electioneering activities, there is a likelihood for inflation to maintain its upward trend in the coming month.  Our forecast shows that inflationary pressure would remain heightened in August 2022. Our results suggest that inflation will range from 18.97 percent in an optimistic scenario to 20.19 percent in a pessimistic scenario.

Major drivers for inflation remain food prices, transportation, housing, and utilities.

Monetary Policy Response

On July 18 and 19, 2022, the Central Bank of Nigeria held its Monetary Policy Committee (MPC) meeting. In the meeting, the committee resolved to raise the monetary policy rate (MPR) by 100 basis points from 13.0 percent to 14.0 percent. The decision to raise the MPR is an economic policy tool to address the rising trend of inflation.



 At CAPE Economic Research and Consulting, we conducted a sentiment analysis on the committee’s consideration and decisions to raise the MPR by 100 basis points. We used an advanced machine learning framework to arrive at the results below.

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