By Elizabeth Adegbesan
Investors’ confidence in Nigeria’s economy dropped below its nine years average according to a survey by the Association of Chartered Certified Accountants (ACCA) and Institute of Management Accountants (IMA).
The association disclosed this yesterday in its latest Global Economic Conditions Survey (GECS) for Q4’19.
The GECS is the largest regular economic survey of accountants around the world. It is based on major indicators of economic activity, and it provides valuable insight into the views of finance professionals on key variables, such as investment, employment and costs.
The GECS for Q4’19 shows that investors’ confidence index in Nigeria dropped to minus three (-3) index points in Q4’19, which is far below the 0.8 index points average for nine years from 2011 to 2019. The survey showed that investors confidence index in Nigeria dropped to -7.6 index points in 2019 from 20.1 index points in 2018.
Commenting on the development, Head, ACCA Nigeria, Thomas Isibor, noted that the recent border closure aimed at mitigating smuggling has increased the country’s inflation rate which was 11.98 percent in December 2019.
He further noted that double digit inflation will result in a low economic growth and Gross Domestic product (GDP) per capita.
He said: “The World Bank expects Nigeria’s GDP growth to be maintained at around 2.0 percent in 2020. The economy remains heavily dependent on neither oil where neither prices nor output look 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.”
In terms on investors’ confidence in the global economy, the survey stated, “Global economic confidence bounced back in Q4 2020, to around its level in mid-2019. The global poll of 2,560 accountants shows 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.
On outlook for the global economy this year, the report stated: “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 the global economy is likely to expand at a steady if modest rate this year of close to 3.0 percent. It also says 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.”