May 2024: Key developments in domestic and global economies by Yemi Cardoso - ITREALMS

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Excerpts from communique 152 of the Monetary Policy Committee. 

Domestic headline inflation rose further to 33.69 per cent in April 2024, from 33.20 per cent in March, driven by both the food and core components. On a month-on-month basis, however, headline inflation declined significantly to 2.29 per cent in April 2024, from 3.02 per cent in March.

The food and core components also declined to 2.50 and 2.20 per cent from 3.62 and 2.54 per cent, respectively, in the same period. According to the National Bureau of Statistics, real GDP grew by 3.46 per cent in the fourth quarter of 2023, compared with 2.54 per cent in the third quarter, driven by both the oil and non oil sectors.

Recent Purchasing Manager’s Index (PMI) suggests that economic activities will continue to expand in 2024. In addition, staff forecasts indicate that the domestic economy will grow by 3.38 per cent in 2024.

According to the IMF, global growth in 2024 and 2025 is projected at 3.2 per cent apiece, while it revised Nigeria’s growth upwards to 3.3 per cent from 3.0 per cent in 2024.

The identified headwinds to this projection are the tight financial conditions and broad disruptions to the global supply chain associated with geopolitical tensions and economic fragmentations.

While these are feeding directly into a rally in the prices of key commodities such as grains and oil, global inflation is projected to continue to decelerate in 2024 but could remain above the long-run objectives of advanced economy central banks.

This group of central banks are likely to pause their rate hike cycles in the near term to observe the trend of inflation.

Accordingly, the Committee will continue to monitor developments in the global and domestic economies to guide policy and ensure that inflation expectations are adequately anchored.

All twelve members attended the meeting. The next meeting of the Committee will hold on the 22nd and 23rd of July 2024.

*Contributed by Olayemi Cardoso, Governor, Central Bank of Nigeria.