Global economists have predicted a 12% inflation rate and an 8.2% economic growth rate for Nigeria in 2022, the third-worst inflation rate out of over 32 countries surveyed by Bloomberg.
Nigeria was third from bottom with an inflation rate target at the end of Q4 of 12.1% behind Turkey and Argentina with 21% and 46.7% respectively.
In terms of GDP Growth rate, they projected 2.8% growth 9th from Bottom higher than countries like Chile, Mexico, Turkey, Russia, Hong Kong. South Africa and Brazil were next to bottom and bottom respectively.
This is tantamount to Stagflation which is a combination of rising inflation rate and tepid GDP growth rate. Countries in stagflation find it extremely difficult to exit due to the intersection between inflation and GDP growth rate. Typically, a higher inflation rate should be good for GDP growth rate if the inflation rate is single digits.
According to Nairametrics, the report also cites supply chain challenges brought on by Covid-19 and the billions of dollars in stimulus funding as contributory factors to rising inflation across the world. This has forced the Western and bigger economies to consider raising interest rates this year which is likely to impact emerging market economies and frontier markets like Nigeria.
“Ziad Daoud of Bloomberg Economics identified five that are especially vulnerable to rising U.S. rates: Brazil, Egypt, Argentina, South Africa, and Turkey, or the Beasts. (Although President Recep Tayyip Erdogan’s unconventional approach to taming inflation, by cutting rates, arguably puts Turkey in a class of its own.)” (Nairametrics)
