A gauge of the nation’s economic confidence in the fourth quarter (Q4) 2019, showed not just a dip, but a decline below long-run average over the year, a study by the global accounting body has revealed.
However, the latest Global Economic Conditions Survey (GECS) from the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA) revealed that “orders” remain comfortably above both recent and long-run averages.
The Head of ACCA Nigeria, Thomas Isibor, recalled that the World Bank expects Nigeria’s Gross Domestic Product (GDP) growth to be maintained at around two per cent in 2020.“The economy remains heavily dependent on oil where neither prices nor output looks likely to boost the economy this year. In addition, the closure of Nigeria’s land borders last year to reduce smuggling has pushed up inflation, especially in the food category.
“Double-digit inflation means that tight monetary policy will continue to act as a moderating influence on economic growth, which will remain below the rate needed to increase GDP per capita,” he said.
According to him, what the GECS Q4 2019 emphasises is the fact that individual country’s economies are hyper-connected.
“Social, political or fiscal movements in one country affect another, sometimes very powerfully. There are risks ahead that need to be managed very carefully, such as debt levels, which are elevated and increasing in many emerging markets,” he added.
A global poll of 2,560 accountants showed that all key regions reported a bounce in confidence and the most confident part of the global economy was again South Asia and the Middle East.
Looking ahead, the GECS report takes an in-depth year ahead look at the prospects and risks facing the global economy in 2020, predicting that after slowing in 2019, it is likely to expand at a steady, modest rate of close to three per cent this year.
It also shows that the risks of 2019 will mainly persist into 2020, including a re-escalation of trade tensions, geopolitical risks, especially in the Middle East, high levels of emerging market debt and the UK-EU trading relationship post-Brexit.
ACCA’s Chief Economist, Michael Taylor, added: “Many risks to the global economy in 2020 are the same as in 2019, including trade tensions between the U.S. and China, which were a major cause of slowing global growth.
“Recent developments in this area have been positive, but risks of a re-escalation with renewed tariff increases remain. The Middle East is the current focus of geopolitical risk although the potential for conflict here to hurt the global economy through a surge in oil prices is much reduced,” he said.