Nigeria at risk of hyperinflation, says economist

AN e conomist, Johnson Chukwu, has warned that the country is currently at risk of hyper- inflation. According to him, inflation - ary pressure is likely to be sustained for most parts of 2024 due to the CBN funding of the federal government expansionary budget, naira depreciation and inability to improve food production due to continued insecurity in the north.

In a report titled: ‘ Nigeria Economic Outlook 2024', Chukwu argued that efforts by the government to introduce price controls and commodity boards would worsen the pricing of basic commodities.

Chukwu, who is also the Chief Executive Officer of Cowry Asset Management Limited, also predicted that the naira would suffer additional depreciation in 2024 possibly at a higher magnitude than the 2023 decline.

He noted that the rate of depreciation of naira has accelerated in the past few days as virtually every economic agent embarked on a flight to safety, even as several directives and policy action points from the apex bank are indicative of confusion and panic by the monetary authorities and therefore sending wrong messages to economic agents.

On a sectoral basis, Chukwu predicted that the agricultural sector which grew by 1.13 per cent in 2023 and down from 1.88 per cent in 2022 would continue at marginal rates as the government struggles to improve the security situation of the country.

In addition, he said the withdrawal of intervention funds from the sector will further constrain investment in the sector, causing prices of most stable commodities to rise above consumers’ income.

For the trade sector, the expert noted that aside from recording a downturn from 5.13 per cent in 2022 to 1.66 per cent in 2023, the sector will witness weak growth as a result of weak consumer demand and foreign exchange scarcity.