2023: FX shortage to persist, Coronation Merchant Bank forecasts

Joy Onuorah
Joy Onuorah

The foreign exchange liquidity problem impacting the economy is likely to last for a while, according to a prediction made by Coronation Merchant Bank.

The Coronation Bank’s Chief Economist, Chinwe Egwim, made this announcement in a statement on the occasion of the publication of the bank’s 2023 Economic Review and Outlook report, which focuses on trends for key macroeconomic indicators and pertinent new policy themes that will influence 2023.

Egwim anticipated that 2023 will bring a variety of economic conditions in the paper titled “Baton Hand-Off: Economic Headwinds and Expected Resilience”.

According to her, both developed and developing economies may continue to experience inflation at the current rate.

“The resultant effect of monetary policy tightening is also expected to continue but at a reduced pace given the inflation outlook across markets which points towards gradual moderation in H2 2023.

“For Nigeria, FX liquidity constraints are likely to continue in the near term. It is an election year, there are concerns around demand-pull inflation on the back of expected spending (naira circulation) associated with electioneering.”

Egwim clarified that the recent naira redesign policy, if put into practice, might help to reduce this inflation risk.

In her words; “there are also concerns around policy continuity post-election, as well as an expected lull in economic activity on the back of the transition phase. Nigeria’s GDP growth is expected to maintain its growth trajectory but at a relatively slower pace in 2023.”

The paper, which also examines sectoral trends, inflationary pressures, domestic oil market dynamics, perspectives on monetary and fiscal policy, and global economic headwinds and growth trends, among other topics, examined how the global economic shock affected Nigeria.

The MD/CEO of Coronation Merchant Bank, Banjo Adegbohungbe, commented on the news saying; “The impact of recent global economic shocks on the Nigerian economy were prevalent in 2022 and are expected to persist in 2023.

“However, there will be opportunities to unlock new growth, particularly in the second half of the year. This report is a potent tool for decision makers which would assist our clients, investors and stakeholders to better navigate the current economic environment and achieve their respective strategic goals.”

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