The latest Global Economic Conditions Survey (GECS), by the Association of Chartered Certified Accountants(ACCA) and the Institute of Management Accountants (IMA) has revealed that economic confidence in Nigeria in the fourth quarter of 2019, below its long run average over the year.
However, the report stated that orders remain comfortably above both recent and long run averages.
Commenting on the report, Head of ACCA Nigeria, Thomas Isibor, said: “The World Bank expects Nigeria’s GDP growth to be maintained at around two per cent in 2020. The economy remains heavily dependent on 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.”
Isibor added: “What our 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 which need to be managed very carefully, such as debt levels which are elevated and increasing in many emerging markets.”
The report showed that global economic confidence bounced back in Q4 2019, to around its level in mid-2019. The 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.
In the review period, GECS’s inflation measure fell to the lowest level in three years at 42 per cent, while inflation in developed and many developing economies was running at low levels.
Furthermore, the report stated that in some cases, there were concerns that inflation was too low such that deflation could not be ruled out.
Looking ahead, the GECS report took a look at the prospects and risks facing the global economy in 2020, predicting that after slowing in 2019 the global economy was likely to expand at a modest rate this year, at about three per cent.
It also said the risks of 2019, would 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.
Speaking of the global picture, 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 US 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.”